For decades, people have been moving out of cities and into the suburban areas. Traditionally, this has been families, whose desire for their own home can be primarily satisfied in surrounding areas. Hence, this suburbanisation has consistently been accompanied by the strong growth of many major cities and university cities in recent years. For around four years, however, relocations beyond the city walls have been gaining momentum. Since 2017, the top six cities have shown overall negative net internal migration.

A glance at Berlin illustrates that the negative net internal migration of the cities is principally attributable to suburbanisation. Between 2017 and 2019, the capital lost a net balance of approximately 12,000 inhabitants per year to surrounding areas and this trend is rising. A further net total of 3,600 people per year moved to other regions in Brandenburg. On the other hand, the net migration to and from other countries and the rest of Germany over the last decade has been consistently positive.

So, why are people increasingly relocating from cities to the surrounding regions? Besides the question of individual living preferences, affordability is also playing an important role. The more expensive and strained the housing markets in core cities become, the more attractive it becomes to relocate beyond the city walls. In view of the rent and price increases in recent years (see also: Will demand for residential property increasing and, if so, why?), it is little wonder therefore that suburbanisation was on the increase even prior to the outbreak of the pandemic. In 2020, rents in the surrounding areas of the top six cities were, on average, around 25% lower than in the corresponding core cities. The differential was particularly wide in Munich and Frankfurt at 33% and 31% respectively. The differential on sale prices of houses and apartments in the top six regions was even greater at an average of approximately 34%. The highest price difference between core city and surrounding region was registered in Frankfurt (42%) while the lowest was found in Munich (29%).

Asking rents showed varying trends in the regions. While in the Berlin region, rents over the last five years have risen significantly faster in the surrounding areas than in the city itself, the reverse is true in Frankfurt and Munich. These were also the only two cities where asking rents also rose faster than in their surrounding regions in 2020. Asking prices, meanwhile, rose faster last year in the Berlin, Düsseldorf, Cologne and Munich suburban regions than in the core cities. However, prices also rose sharply in the surrounding regions of Hamburg and Frankfurt. Since the households relocating to surrounding areas are likely to comprise a disproportionately high number of owner-occupiers, some of the significant sale price increases (e.g., + 12.1% in Berlin’s surrounding region) are most likely a reflection of the very high demand.

Hence, the price and rental growth in the top six surrounding regions are strong indications that even more people have decided to relocate to suburbs during the pandemic. The lockdown experience may have increased the desire for some households to have more living space and particularly more green space. Another consideration that could be playing a role is that remote working will be possible to a greater extent going forward. If people only have to visit the office a few days per week, they will have to commute less frequently. It can be assumed that many employees will then be prepared to accept a longer commute. This could lend further momentum to suburbanisation and further increase demand for residential property in the surrounding regions. This would produce further growth in rents and sale prices and more new housing construction.