In search of determinants for quoted housing rents: Empirical evidence from major German cities

Abstract

Housing policy made a comeback on the German political agenda. Apartment rental prices increased drastically in most major cities over the last years. Despite wide agreement by policymakers regarding the need for regulation of the housing market, there is close to no empirical evidence on the drivers of rent prices. We follow a comparative, quantitative approach to determine the driving factors of rent prices in German cities, taking economic, societal and political variables into account and using time-series analysis. Our results show that the share of students and the local mean income account for differences in quoted rent prices.