»Steigende Mieten verstärken die Einkommensungleichheit«

By analyzing the trends in inequality of household income and housing expenditures – the largest component of household consumption – over the last two decades in Germany, we demonstrate that inequality in income after housing expenditures increases more than that before housing expenditures, with the 50/10 ratio increasing threefold once housing expenditures are considered. For the bottom income quintile, the share of income spent on housing rises considerably, while for other income quintiles it increases much less or even slightly declines.

These trends can be attributed to several factors. First, an increase in rental prices during the 1990s makes renting more expensive, while for owner-occupiers, housing expenditures rise far less and even fall after the mid-2000s because of falling mortgage interest rates and lower outstanding mortgages. Altogether, this has distributional consequences given that owners are more likely to be from the upper part of the income distribution. In calculating net imputed rents for homeowners, we find a sharp decrease in the relative costs of homeownership versus renting. Additional factors that contribute to rising housing expenditures at the lower end of the income distribution include compositional changes, mainly in household structure (a rising share of single households) and regional migration patterns (a rising share of those living in large cities and i n West Germany). The decline in the provision of social housing plays only a minor role. Finally, the share of income spent on housing as a necessity good is further increased by declining real income among individuals at the lower end of the income distribution.

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