DIP partner Aengevelt Immobilien has compared life satisfaction in 40 major German cities to the level of apartment rents at the place of residence. The result: There is no significant correlation, as the differences in rent levels explain just 0.6% of the variance in life satisfaction. Rather, a high rent level results from the fact that a city is so attractive that it attracts many newcomers, whose demand causes the rent level to rise. High rents are accepted in particular if a city offers good educational and employment opportunities in addition to efficient infrastructure.
The recently published SKL city ranking has determined the subjective life satisfaction for the 40 largest German cities with the help of a scale from 0 (“not at all satisfied”) to 10 (“completely satisfied”). The average varies from 5.80 (Rostock) to 7.74 (Erfurt). The research department of the Aengevelt real estate company has now correlated the average life satisfaction – also known as the “happiness index” – with the average rents for existing apartments with medium residential value, as can be seen from the IVD residential price index.
The statistical analysis yielded a correlation coefficient of -0.08, which means that only 0.6% of the variance in life satisfaction can be explained by the local rent level. This non-correlation can be illustrated by individual examples: Düsseldorf has a high average rent of EUR 11.50/m² (the eighth highest in the spectrum of the 40 cities surveyed), but is significantly higher with a satisfaction index of 7.41 – namely in third place in the happiness ranking. Wiesbaden, where the rent is almost the same at EUR 11.25/m², is only in second to last place with a satisfaction of 6.50. The two cities with the highest average rents – Munich with EUR 17.80/m² and Stuttgart with EUR 14.80/m² – are in the middle of the field in terms of satisfaction (24th and 21st place) and the fourth most expensive city Hamburg (EUR 12.90/m²) with a happiness index of 7.20 even in the upper half of the world.
third (10th place).
The city with the lowest median rent level – Gelsenkirchen with EUR 6.00/m² – ranks seventh from last in terms of life satisfaction with a happiness index of 6.81. In other words, a low rent does not increase satisfaction, and in cities with very high rents, you can still be happy.
Düsseldorf, the happiest city in the ranking with more than 500,000 inhabitants, shows the factors responsible for a high level of life satisfaction comparatively well: In the Rhine metropolis, the disposable income per inhabitant is 29,832 euros, 23% above the average of the other cities studied, which means that the ability to pay rent is also above average here. In addition, Düsseldorf scores with a very good educational landscape (school drop-out rate 4.4% compared to 7.8% for the city average). The fact that there are hardly any really dissatisfied people in Düsseldorf (4.1% compared to 8.6% on average in the city), but a clear majority of highly satisfied people, is all the more remarkable because the high proportion of people living alone should even depress Düsseldorf’s happiness index. Obviously, single households also feel comfortable in the state capital.
Dr. Wulff Aengevelt, Managing Partner of Aengevelt Immobilien: “Life satisfaction depends on numerous factors, including educational opportunities, job opportunities and income opportunities. The level of residential rents must be considered in a differentiated manner with regard to subjective satisfaction. The relevance of the subjective assessment of the rent level when deciding in which city one wants to live is closely related to the complex regional mix of opportunities. Every economist knows that the price of a good is influenced not least by the level of demand. This also applies to the pricing of real estate. The focus of politics on rent levels and rent brakes does not correspond to what people really want. They primarily want to live in an overall attractive city and region and are also prepared to accept the resulting price level
and their consumer behavior.”
