Like big cities the world over, Munich is dealing with critical issues — e.g., housing, climate change, immigration.
These issues, easily invisible to a tourist, threaten to change the face of the city. What we can learn from Munich’s triumphs and mistakes is part of what makes it worth a visit. Here’s a quick look at one issue.
A roof over your head is an existential issue, and tourists don’t necessarily see it on a visit. But Munich repeatedly has been found to be the most expensive city in Germany, and a lack of housing for low and middle-income renters — teachers, public employees, plumbers, clerks — threatens to fundamentally change the type of people who can live in cities such as this.
I used to walk by the apartments above on the way to school. They’re old construction in the center of town, and their cost must be astronomical. In a suburb across the river, a condo was sold recently for $8 million — more than $2,400 a square foot.
In June, a real-estate agent reported housing prices had dropped 15%, depending on location. Don’t kid yourself about affordability. The “average” stand-alone house in Munich goes for more than $2 million. And it’s not just houses. The online database Geomap shows only small differences between the prices per square foot for apartments and houses.
Meanwhile, high interest rates are driving more people to rent and pushing rental prices higher. In March 2023, when the latest apartment rental costs were announced, the cost was up 21% in two years, the highest increase ever recorded in the city.
One online source put the average cost to rent an apartment in Munich at $1,950 a month. That’s before utilities such as electricity and heat, which have stolen the headlines by creating their own cost-of-living crises, especially after war-related energy shortages. A study just said that utilities costs now are 30% of income across Germany.
Last year, Munich’s population grew by 25,000 to 1,590,218, and today housing there is scarcer than it has been in 20-30 years. The city says about 46,400 new apartments have been built in Munich during the last six years, about 9% fewer than planned.
Macro factors such as the pandemic, war-broken supply lines or interest rates get much of the blame for the shortage. But a big, unchanging factor is supply and demand. Munich is just a great place to live:
- High-paying jobs and nearly full employment
- Two big-name universities
- A functioning public transportation network
- A thriving restaurant scene, a competitive art milieu, concert halls for every musical taste, cafes with open-air, street-side seating
- Two of the nation’s Top 10 museums
- The huge English Garden park, the Olympic Park and miles of “picnickable” shoreline along the Isar River in the middle of town, supplemented by islands of green all over the city.
Big tech gets part of the blame for prices. Munich wants to be one of three leading world technology centers, after Silicon Valley and London. Companies and entrepreneurs are layering technologies such as artificial intelligence on the city’s centuries-old industrial base, and techies are flooding in. One result is that the average purchasing power of Munich residents is 35% above the German average.
The city is seeking effective but still legal ways to respond to the crisis. It is accelerating planning and construction approvals and easing some construction requirements. It’s scrutinizing housing that stands empty. It’s buying apartment buildings when it’s allowed and looking for means to make them affordable.
It is seeking to partner with the private investors it desperately needs, adding incentives to ease interest-rate, supply-line, design and other restrictions that are stalling construction of new housing. It is trying to alter rules to make more housing available according to social needs.
If you look at the latest labor market report for Munich, you’ll conclude housing can’t simply mean more high-income units. The job openings in spring were mainly for workers in manufacturing and health. Salaries for that kind of work are moderate at best.
Ancient wisdom was that housing should take 30% of income. For the young woman behind the counter at the drug store, renting her Munich flat takes at least 50%.
The suburbs are no salvation. Eight of the suburbs surrounding Munich are in the top 10 most expensive areas outside of cities in Germany.
Whether to laugh or cry
ShabbyShabby was an an art project of the Munich Studio Theater that sought to heap scorn on the enormously high rents in the Bavarian capital. During a month in the fall of 2015, you could rent a ShabbyShabby for two for less than $40 a night. About two dozen vastly different huts were erected all over town, including this tiny shack in front of the Gucci store in the glitzy Maximilianstrasse shopping mile.