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Berlin Steps up Public Housing Construction

The situation on Berlin's housing market remains strained. High rent rates and a dwindling supply of accommodations pose serious challenges for flat hunters in Germany's first city. Especially households with low or medium income are often hard pressed to find affordable housing. Over the past four years alone, asking rents in Berlin have increased by 9.1 percent. This is the upshot of the latest rent-benefit and rent report published by the Federal Ministry of Building and Urban Development. The City of Berlin now intends to invest in subsidised housing development in order to implement a socially fair housing policy. The idea is to put new rental and cooperative housing units on the market at socially responsible square-metre rents.

Boosting the Development of Affordable Housing

To this end, the State of Berlin is prepared to co-finance building projects in order to relieve the local housing market. Private builders, municipal housing companies, and housing cooperatives have the choice of two sponsorship models. They may either apply for a repayment subsidy on the building loan in return for charging rents no higher than 6.50 euros per square metre, or else they may take advantage of allowances in proportion to tenant income. Either way, the rent control period that comes with the subsidies is 20 years. Berlin's new policy is meant to facilitate the completion of 2,500 subsidised flats next year, and as many as 3,000 in 2017. If the initiative meets with success, it will be stepped up.

Tight Resources on Berlin's Housing Market

The housing shortage in Berlin affects all residential price segments and virtually all boroughs to more or less the same extent. And not just rental flats are becoming a rare commodity – the supply in condominiums is visibly drying up as well. The number of condos sold in Berlin suffered a one-year decline of 17.7 percent last year, as the latest ACCENTRO Homeownership Report 2015 shows. Analogously, revenues dropped by a hefty 13% to 3.72 billion euros. The underlying reason is by no means flagging interest on the part of buyers, but the diminished supply in marketable property. Only new-build flats take exception to the generally regressive trend. The number of new condominiums sold in Berlin increased by 15.4 percent. This makes it all the more important for the State of Berlin to step up its house-building subsidies. Investing in housing development is the only way to bring long-term relief to Berlin's residential property market.