Lots has been written about Germany’s housing market and the ever-increasing rents in the major cities.
All of this is true, but there are nevertheless still areas of Germany which are extremely affordable, especially when compared to rents in major cities in the US, UK, Canada and Australia.
The best value cities in Germany?
However, we want to take a different focus here and approach the problem from a different angle.
Let’s get one thing clear first of all.
Moaning about housing costs isn’t going to magically solve your dilemma of not being able to find an affordable apartment in the area you want to live in.
Instead, let’s take a look at which cities in Germany represent the best value? Where an average apartment is comparatively cheap to rent when compared to other cities, or even other areas of the same city.
And we also show how you can calculate whether it makes sense to sacrifice salary expectations, as a result of living costs being proportionally much more affordable elsewhere.
But I Need To Live Wherever I Find A Job
Well, yes, of course you do. But ask yourself this:
How location dependent are you REALLY?
Are you letting the job choose you, rather than you choosing where you’d like to live and then going about finding a suitable job in that location?
Let’s accept the fact that some professions do tend to cluster in certain areas:
- Finance in Frankfurt;
- Tech start-ups in Berlin;
- Automotive industry around Stuttgart;
- Media in Cologne and Hamburg;
Nonetheless, I would argue that in most situations, you are much more location independent than you may initially believe when it comes to a job search.
This is especially the case if you are approaching your job search with nothing such as a family, partner, or any other connection determining in which part of the country you work.
So, why not go and seek out employment in one of the best value cities in Germany, where housing is cheap as a % of your net income? It’s by far your biggest expense over and above everything else, once all of your taxes and social insurances have been deducted from your monthly salary.
Here’s an example:
The difference between paying €7 per m2 on your rent in City X, and €10 per m2 in City Y on a 75m2 apartment is €375 a month. That’s €4,500 per year.
Tax & social contributions in Germany are around 40-45% (let’s keep it simple – you can find out more about gross vs. net salaries here)
This would mean you would need to earn €7,500 more per year just to cover the additional cost in rent between living in the more expensive city in this example.
So let’s consider Jane, who earns €50,000 per year gross.
Assuming she takes home 60% of that as net from her gross salary, that’s €30,000 per year, or €2,500 per month. This would put Jane firmly in the “hard working middle” in Germany.
She classically represents the average middle-class German.
Cheaper location: Jane spends 21% of her net salary on rent (without utilities and fees).
Pricier location: Jane spends 36% for the same ficticious apartment, but in a pricier city.