Life in some major German cities is up to a quarter more expensive than average. According to a study, the decisive factor is housing costs. Why is that? And where is it particularly cheap to live?
Where it is cheap or expensive to live in Germany depends primarily on one factor: housing. If you count it, it is 38 percent more expensive in the most expensive city than in the cheapest district, as a current study by the German Economic Institute (IW) and the Federal Institute for Building, Urban and Spatial Research (BBSR) shows.
Without housing, however, there are just 6 percent between the extreme values. An overview of the results and their causes.
Where is it most expensive and cheapest?
Including housing costs, Munich is in first place. Life in the Bavarian capital is a quarter (25.1 percent) more expensive than the German average, followed by the Munich district (16.7 percent), Frankfurt am Main (15.9) and Stuttgart (14.8).
The cheapest places to live are in Vogtlandkreis and Greiz, which are 9.5 percent below the national average. Followed by Görlitz (9.4) as well as Pirmasens and the Salzlandkreis with 9.3 percent.
And without housing costs?
Without housing, Stuttgart is the most expensive, but only at a 4.2 percent premium over the national average. Behind them are Munich (2.1), Aschaffenburg (1.8) and Freiburg (1.6). The study identified the lowest costs in the Leer district, where it is 1.7 percent cheaper, followed by Ostprignitz-Ruppin and Nordhausen with 1.6 percent each.
Is there a pattern behind expensive and cheap?
Due to the strong role of housing costs, it is particularly the large metropolitan areas and surrounding districts that are expensive. There are also attractive residential areas, for example on the edge of the Alps or Lake Constance.
The eastern federal states, on the other hand – with the exception of Berlin and the surrounding area – are usually significantly cheaper than average. Likewise, individual areas in the middle and northwest of Germany, west of Frankfurt and in the extreme north and east of Bavaria.
The fact that the costs in some of the heavily populated cities are far above average is pulling the entire index up. This leads to the surprising result at first glance that of the 400 cities, districts and districts, 274 are cheaper than average.
Only 124 are more expensive, two are practically exactly on average. But a very expensive Munich compensates for dozens of sparsely populated, cheap districts.
Why are the differences without housing so small?
In many areas of the cost of living there are little or no regional differences, as Christoph Schröder from the IW explains. He cites ordering online, groceries from discounters, clothing from fashion chains and supermarkets’ own brands as examples.
On the other hand, the researchers found larger regional differences in restaurants and hotels, but also in the costs of care or insurance, as Schröder’s colleague Jan Wendt says. But the amount of relatively stable other costs dampens their impact.
Accordingly, of the 400 districts, districts and cities recorded, the vast majority without housing is very close to the national average. Only 60 differ by more than 1 percent.
Why does housing make the difference so much bigger?
On the one hand, housing costs have a high weight in the shopping basket. On the other hand, the differences are also very large: in Munich, housing costs are 180.9 percent of the national average, more than two and a half times higher than in the Vogtland district at 68 percent. This is reflected in the numbers accordingly.
How was the data collected?
Collecting price data for a wide variety of goods and services for 400 districts, districts and independent cities is extremely complex given the huge amount of information.
IW and BBSR have worked on the development of their price index for three years and partly use automatic data queries on the Internet – so-called scraping. This resulted in 24 million data points, as Wendt explains. The data status is 2022.
How accurate is the index?
There are certain restrictions as regional prices could not be charged for all goods. These include personal services, fresh flowers or some household goods. Their weight in the market basket for the index is 14.7 percent, but the authors assume that their absence hardly changes the results.
The same applies to some districts in which there was no regional data from supermarkets, which is why average values from districts with a similar structure were used here.
Source: Stern
