Poverty in Germany is worse than expected – high housing costs

There is new, alarming data on the growing poverty in Germany: According to a study, more people in Germany live in difficult financial circumstances than previously assumed due to high rents and additional costs. Many households spend more than a third of their income on housing costs, and some even spend more than half.

After deducting rent, utilities, interest on loans and other things, more than 17.5 million people would have a disposable income in the poverty range. The research center of the Joint Association came to this conclusion after evaluating data from the Federal Statistical Office.

People who have less than 60 percent of the median monthly income are considered poor. The median income is the income at which exactly half of the population has a higher income and the other half has a lower income.

Several factors are likely to contribute to the increase in rental costs, such as the temporarily extremely rising energy costs in Germany. However, the report on this study does not provide any further details.

The association criticizes that millions of people remain invisible in the usual poverty statistics because their housing costs are not taken into account. “Anyone who only looks at income, but not at the fact that people have less and less money at their disposal because they have to pay high housing costs, is overlooking the extent of poverty in Germany,” says the evaluation.

In fact, 5.4 million more people in Germany live below the poverty line than previously assumed. Adjusted for housing costs, more than a fifth of the population is considered poor. According to these calculations, the threshold for a one-person household is 1,016 euros of freely disposable income per month.

As an example, the research group cites a pensioner with a standard pension of 1,770 euros. With a long-term rental agreement and a rent of 450 euros, she is not considered poor. But if she has to move, for example to a barrier-free apartment, and suddenly pay 900 euros in rent, the woman falls below the poverty line.

“The standard of living is no longer determined only by the level of income; the questions of how much money a person has to spend on housing and how much money is left over are becoming increasingly important,” says the study. Although the same income suggests a similar standard of living, the financial situation of those affected may actually be very different.

According to the evaluation, young adults under 25 – including many students – and older people over 65 are severely affected by so-called housing poverty. People living alone are more likely to be affected than couples because they generally have higher housing costs per person. The situation is worst for single people of retirement age.

There are also regional differences: residential poverty is most widespread in Bremen, Saxony-Anhalt and Hamburg, and least severe in Baden-Württemberg and Bavaria. The difference between the conventional poverty rate and the poverty rate adjusted for housing costs is particularly high in Hamburg and Schleswig-Holstein.

The Joint Association calls on the future federal government to create new, long-term, socially-connected housing and sees state aid as a solution. “A targeted policy to avoid poverty in Germany requires good wages, better social security and a housing policy that keeps rents affordable,” explained Managing Director Joachim Rock.