4 ms·

German rents go up in most places. There was an influx of 1-2 million migrants and refugees, all of which need living space. Additionaly, it's very expensive to

by JanSt 8y ago

German rents go up in most places. There was an influx of 1-2 million migrants and refugees, all of which need living space. Additionaly, it's very expensive to build living space because of very high special requirements for insulation and energy efficiency. It's not worth it / possible for investors to build profitable cheap living spaces, so mostly luxury apartments are build. There are also high ancillary cost (10-15% of price) - i.e. taxes, notary etc.

elcapitan 8y ago
There's also a new system of rent control which probably makes it even more unattractive to invest.
- ibotty 8y ago
  But that's not the reason _at all_ that the rents are skyrocketing. Were it implemented properly the "rent-brake" would prohibit high rents.
  - VMG 8y ago
    that's now how an economy works
  - elcapitan 8y ago
    Well it limits supply, because it makes it less attractive to create more buildings, so the prices go up, if demand is increasing.
    - chrido 8y ago
      The "rent-brake" in Germany does not apply to newly built apartments.
izacus 8y ago
1-2 million refugees are a tiny blip on German population and most of them came nowhere near Berlin. Poor people can't raise rents, the exploding tech sector and Berlin as a place for high-paid techies to move to has probably more to do with it.
- mantas 8y ago
  Poor people can raise rents when they're getting government subsidies.
- JanSt 8y ago
  It's happening all over Germany. They are getting the apartments paid by the state, so high rents are being paid for them. 1-2 million is a huge number of people if you're lacking living space. Where to put them?
  - rjtavares 8y ago
    It's happening all over Europe. We have very low influx of refugees/poor immigrants in Portugal, but rents in Lisbon/Porto are skyrocketing.
    - Malarkey73 8y ago
      ditto the UK. Took virtually no refugees but rents still increasing ... hmmm something wrong with this theory? Seriously though in the UK we have had immigration over the last 20 years and that must have led to higher demand and prices. Best estimates are about 20% in 20 years in England. https://fullfact.org/immigration/have-house-prices-risen-because-immigrants/ https://fullfact.org/immigration/have-house-prices-risen-bec... BUT English house prices have risen by 320% on average over this period. Other factors are - getting married later, more single people, more divorced couples, and financialisation of housing. Probably a similar story in Berlin.
      - ccozan 8y ago
        Munich is very simptomatic of this "singles" issues. More than half of the people there are singles, thus the housing need is quite high. However, since the cheap money from the banks, more people are orienting to buy than rent, which is quite different from the past.
  - maephisto 8y ago
    Talking strictly about Berlin, most of the EU migrants coming in here fall in two categories: - highly skilled workers (IT, Finance, Sales, Marketing) that earn much more than average german folk, and compete for housing with upper class berliners - unskilled workers (constructions) that live usually in temp housing and don't attempt to rent a flat for themselves. As for the refugees, most of them still live in camps distributed across Germany and if they get a flat subsidised by the state it will be in some low demand neighbourhood.
denzil_correa 8y ago
> There was an influx of 1-2 million migrants and refugees, all of which need living space. This seems to be a possible hypothesis. Could you validate it?
- hycaria 8y ago
  At least in Berlin, the influx of other european citizens did have a significant effect on the rents. I cba to find sources in English, but the city is trendy, and locals are annoyed by the masses of young hipsters who come live there, making rents rise, and don't even bother to learn german/integrate the slightest. There were for example articles about berliners who were flabberghasted that some bars and restaurants couldn't take orders in german.
  - jashmatthews 8y ago
    OTOH, native German speakers easily get frustrated very easily and switch into English, if you're holding them up at a shop etc.
    - deleted 8y ago
      [deleted]
  - maephisto 8y ago
    The bars that don't take orders in English don't actually refuse to do that out of some principle but just because there are just not enough German speaking baristas or bartenders or the market. For most business owners that is fine because this is a common scenario just in the trendy hoods where most of their customers are anyways English-only speakers.
- afarrell 8y ago
  It would follow mathematically from the pidgeonhole principle, right?
deleted 8y ago
[deleted]
dx034 8y ago
Much of the increase was driven by low interest rates. Mortgage rates more than halved, allowing people to borrow much more with the same income. Supply is coming (construction activity is at record highs) but will take some time to take pressure out of the market. Germany has always had very low home ownership rates. The influx of migrants has put some pressure on rents (esp on the low end of the spectrum) but hasn't caused the surge in prices for houses or luxury flats. That was mostly driven by a booming job market, higher wages and low interest rates. Berlin was always very cheap compared to other German cities. What we've seen now is more a normalisation than a bubble. But it certainly took some pressure of other markets that already were at very high prices. Luckily, zoning laws in Germany allow new supply and there's a lot of that coming in soon. Some economists expect prices to fall by up to 20-30% in some areas over the next years as supply comes in and interest rates go up (likely starting 2019). That would probably be a healthy correction, easing the tensions that have developed.
- JanSt 8y ago
  We are talking about high rents, not high buying prices
  - dx034 8y ago
    They are highly correlated. Especially in a market where you can convert a flat to rent it out. If house prices are low but rents high, there's a lot of return in buying houses and renting them out. That market usually corrects faster than the general demand/supply imbalance. An exception is high rents for flatshares. Not all flats are suitable for that so that an influx of young people (e.g. students) can increase prices for flatshares much more than that of other flats.
erikb 8y ago
Well, at least in Berlin you still have renter cooperatives, which also need to be cost efficient but not as profitable. I think even the city government jumps in to support new building efforts by the cooperatives.
flohofwoe 8y ago
It may be the immigrants, alright. But the rich, white immigrants from Western Europe and North America, not the ones you probably have in mind. Also I wonder how many flats have been turned into illegal AirBnB hotel rooms, lots of new faces that are only around for a couple of days in the house I live since a few months ;)
- 738472527784 8y ago
  As someone from Berlin, I can very much say this is the case.

by JanSt 8y ago

elcapitan 8y ago

There's also a new system of rent control which probably makes it even more unattractive to invest.

ibotty 8y ago
But that's not the reason _at all_ that the rents are skyrocketing. Were it implemented properly the "rent-brake" would prohibit high rents.
- VMG 8y ago
  that's now how an economy works
- elcapitan 8y ago
  Well it limits supply, because it makes it less attractive to create more buildings, so the prices go up, if demand is increasing.
  - chrido 8y ago
    The "rent-brake" in Germany does not apply to newly built apartments.

izacus 8y ago

1-2 million refugees are a tiny blip on German population and most of them came nowhere near Berlin. Poor people can't raise rents, the exploding tech sector and Berlin as a place for high-paid techies to move to has probably more to do with it.

mantas 8y ago
Poor people can raise rents when they're getting government subsidies.
JanSt 8y ago
It's happening all over Germany. They are getting the apartments paid by the state, so high rents are being paid for them. 1-2 million is a huge number of people if you're lacking living space. Where to put them?
- rjtavares 8y ago
  It's happening all over Europe. We have very low influx of refugees/poor immigrants in Portugal, but rents in Lisbon/Porto are skyrocketing.
  - Malarkey73 8y ago
    ditto the UK. Took virtually no refugees but rents still increasing ... hmmm something wrong with this theory? Seriously though in the UK we have had immigration over the last 20 years and that must have led to higher demand and prices. Best estimates are about 20% in 20 years in England. https://fullfact.org/immigration/have-house-prices-risen-because-immigrants/ https://fullfact.org/immigration/have-house-prices-risen-bec... BUT English house prices have risen by 320% on average over this period. Other factors are - getting married later, more single people, more divorced couples, and financialisation of housing. Probably a similar story in Berlin.
    - ccozan 8y ago
      Munich is very simptomatic of this "singles" issues. More than half of the people there are singles, thus the housing need is quite high. However, since the cheap money from the banks, more people are orienting to buy than rent, which is quite different from the past.
- maephisto 8y ago
  Talking strictly about Berlin, most of the EU migrants coming in here fall in two categories: - highly skilled workers (IT, Finance, Sales, Marketing) that earn much more than average german folk, and compete for housing with upper class berliners - unskilled workers (constructions) that live usually in temp housing and don't attempt to rent a flat for themselves. As for the refugees, most of them still live in camps distributed across Germany and if they get a flat subsidised by the state it will be in some low demand neighbourhood.

denzil_correa 8y ago

> There was an influx of 1-2 million migrants and refugees, all of which need living space. This seems to be a possible hypothesis. Could you validate it?

hycaria 8y ago
At least in Berlin, the influx of other european citizens did have a significant effect on the rents. I cba to find sources in English, but the city is trendy, and locals are annoyed by the masses of young hipsters who come live there, making rents rise, and don't even bother to learn german/integrate the slightest. There were for example articles about berliners who were flabberghasted that some bars and restaurants couldn't take orders in german.
- jashmatthews 8y ago
  OTOH, native German speakers easily get frustrated very easily and switch into English, if you're holding them up at a shop etc.
  - deleted 8y ago
    [deleted]
- maephisto 8y ago
  The bars that don't take orders in English don't actually refuse to do that out of some principle but just because there are just not enough German speaking baristas or bartenders or the market. For most business owners that is fine because this is a common scenario just in the trendy hoods where most of their customers are anyways English-only speakers.
afarrell 8y ago
It would follow mathematically from the pidgeonhole principle, right?

deleted 8y ago

[deleted]

dx034 8y ago

Much of the increase was driven by low interest rates. Mortgage rates more than halved, allowing people to borrow much more with the same income. Supply is coming (construction activity is at record highs) but will take some time to take pressure out of the market. Germany has always had very low home ownership rates. The influx of migrants has put some pressure on rents (esp on the low end of the spectrum) but hasn't caused the surge in prices for houses or luxury flats. That was mostly driven by a booming job market, higher wages and low interest rates. Berlin was always very cheap compared to other German cities. What we've seen now is more a normalisation than a bubble. But it certainly took some pressure of other markets that already were at very high prices. Luckily, zoning laws in Germany allow new supply and there's a lot of that coming in soon. Some economists expect prices to fall by up to 20-30% in some areas over the next years as supply comes in and interest rates go up (likely starting 2019). That would probably be a healthy correction, easing the tensions that have developed.

JanSt 8y ago
We are talking about high rents, not high buying prices
- dx034 8y ago
  They are highly correlated. Especially in a market where you can convert a flat to rent it out. If house prices are low but rents high, there's a lot of return in buying houses and renting them out. That market usually corrects faster than the general demand/supply imbalance. An exception is high rents for flatshares. Not all flats are suitable for that so that an influx of young people (e.g. students) can increase prices for flatshares much more than that of other flats.

erikb 8y ago

Well, at least in Berlin you still have renter cooperatives, which also need to be cost efficient but not as profitable. I think even the city government jumps in to support new building efforts by the cooperatives.

flohofwoe 8y ago

It may be the immigrants, alright. But the rich, white immigrants from Western Europe and North America, not the ones you probably have in mind. Also I wonder how many flats have been turned into illegal AirBnB hotel rooms, lots of new faces that are only around for a couple of days in the house I live since a few months ;)

738472527784 8y ago
As someone from Berlin, I can very much say this is the case.