Impression of Skyrocketing Rents in Berlin Now Officially Confirmed by Rent Index Report

[click here for a high resolution map]

By Renard Teipelke

This week, the Senator for Urban Development, Ingeborg Junge-Reyer (SPD), published the biennial report on Berlin’s rent index. It came with no surprise that rents have considerably  increased in the last two years. But now, people can refer to an official document when complaining about the increasingly tense situation in Berlin’s housing market. Senator Junge-Reyer explained the high increase of the average rent by 7.9 percent in comparison to 2009 with a ‘catch-up effect’ that was due to the world economic crisis during which rents did not increase as steeply as they were supposed to do without a crisis from 2007 to 2009.

The Senator underscored that Berlin still is the most affordable big city in Germany, as well as in comparison to other big players such as Rome, Paris, or London. However, many commentators have rebutted this conclusion since it should not be Berlin’s objective to compare its rent index with those of places where the development has already resulted in critical outcomes ranging from extreme forms of gentrification in inner-city neighborhoods to unsustainable sprawling suburbs.

In the report, a shortage of studio apartments and two-room flats was indicated. A condition, Senator Junge-Reyer explained, that is due to demographical changes and the influx of young people into the city. Tenant associations criticized the inaction of the Senate and objected the housing market policies of the coalition between the Social Democrats (SPD) and the Socialist Democrats (DIE LINKE). More and more residential housing is converted into office space and hardly any counteraction by the administration can be identified. The biggest flaw with regard to the latest report is the contradiction between rent prices on paper and in reality. On the website of the left-wing German newspaper taz (“die tageszeitung”), Gereon Asmuth sarcastically challenged Senator Junge-Reyer: If the Senator succeeds in actually finding an apartment in one of the upcoming neighborhoods for a price indicated in the rent index report and without the help of any personal connections, she can stay in office and keep on stating that there is no alarming situation in Berlin’s housing market. We will see in the upcoming election campaign during the summer what role this issue will play in public and in politics.

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3 Responses to Impression of Skyrocketing Rents in Berlin Now Officially Confirmed by Rent Index Report

  1. Ares says:

    I am not sure about how to intepret the rise in prices. I understand the talk about “normalization”, i.e. that the prices in Berlin are getting closer to the ones in other cities, but why does it happen? Is there really a higher demand for space without a corresponding rise in supply? Is it simply the constant Berlin-hype that is creating a bubble once again (s. mid 1990s) ?

    • splacing says:

      I would assume that the prices are rising because:

      1) investors put higher prices on real estate in Berlin because they are anticipating an increasing value for these objects in the following years
      2) and at the same economically better-off people are demanding housing/office space, are competing against each other, and are thus willing to pay accordingly
      3) while also the general quality of buildings through remodeling and upgrading has increased (i.e. the actual value)

      This means that the price hikes are based on speculation (1), are also demand-driven (2), and furthermore related to actual physical improvements (translated into market prices).

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