Surge in Residential Rents in Berlin
Rent rates in Berlin increased noticeably in 2017. Having stood at 9.65 euros per square metre as late as Q4 2016, the median asking rent went up by twelve percent to 10.80 euros per square metre by the end of 2017. Since 2010, median asking rents have gone up by around 71 percent. This is the upshot of the latest Housing Market Barometer published by IBB Investment Bank Berlin, which the IBB presented together with Berlin’s Senate Department for Urban Development and Environment in early May.1
Berlin’s rent index quotes a rate of 6.39 euros per square metre.2 Finding a flat in the German capital that is actually to let at this rate, however, is becoming increasingly difficult. Only one in ten residential listings quotes a median net rent of less than seven euros per square metre. Just 3.4 percent of the flats currently on the market citywide are offered for less than six euros per square metre. Inside the rapid-transit circle line, you will barely find any flat for less than eleven euros per square metre. Even in the borough of Mitte, which has a very mixed demographic structure and where the middle income falls short of Berlin’s average, half of all rental flats on the market were listed for more than 13 euros per square metre in the fourth quarter of 2017. Affordable rental flats below seven euros per square metre are almost exclusively found in the eastern borough of Marzahn-Hellersdorf.
Growing Criticism of Berlin’s Housing Policy
Meanwhile, condominium prices have also continued to go up at a brisk pace. The median asking price for condominiums equalled 3,924 euros per square metre in Q4 2017. Compared to the median asking price of 3,538 euros per square metre that was paid during the prior-year period, this implies an increase by almost eleven percent. Listings for detached and semi-detached homes quoted an average of 435,000 euros and thus a 16 percent higher price than the previous year.
Available supply on Berlin’s housing market keeps lagging far behind demand. Given the fast demographic growth, the volume of housing construction is insufficient. Worse yet, the number of planning permissions in the German capital has started to decline lately, which suggests that the supply shortage is unlikely to be resolved any time soon. The total of 24,743 flats that were approved in 2017 implies a decline by 1.2 percent year on year. Especially the number of flats created through construction measures in existing buildings (for instance through loft conversions) declined dramatically by 19.4 percent.3
With a view to the shrinking planning approval figures and the soaring rent rates, voices criticising Berlin’s Senator for Urban Development, Katrin Lompscher of the Left Party, are getting louder. The housing industry is protesting that private development activities are being hampered. “Without the private industry players, the Senate would have had to pack up a long time ago, and yet the municipal authorities are using the planning law to stall the construction of new housing,” Susanne Klabe, a member of the Berlin chapter of the BFW Federal Association of Independent Housing Companies and one of the critics, told the “Tagesspiegel” daily.4