24 Aug Berlin Urgently Needs Small and Medium-sized Apartments in the Low Price Segment
Black Label Properties Calls on the Berlin Government to Rethink its Housing Policy.
London, 24. August 2018 – Berlin’s irresponsible housing policy since the 1990s is now showing its full impact. With the sale of more than half of the city’s apartments to private investors and increasing demand, housing in Berlin is becoming increasingly expensive. The fall of the Berlin Wall, the subsequent gold rush in the eastern part of the city and the financial crisis in 2008 have all contributed to the fact that prices for real estate are now skyrocketing. It is time for a new housing policy.
The reasons for the current shortage of affordable housing lie in the 1990s and 2000s. Many cities assumed that the population would stagnate or even decline. Driven by tight budgets, many municipalities, federal and state governments sold properties – including apartments on a large scale.
“The current Berlin government ignores the cause of the problem and closes itself off from the larger economic contexts. Since almost all properties in Berlin are now on the open market, the city hardly earns any rents to reinvest this income in social housing projects, for example. Measures such as the ineffective rent brake, milieu protection, possible expropriation of condominiums are only political eyewash and distract from the real problem that there is now simply too little housing space in Berlin and the government has long since lost its ability to act in housing policy”, → Achim Amann, co-founder of Black Label Properties, comments on the high property prices in the capital.
A declaration of bankruptcy for social urban development
In the noughties, support programmes for social housing were rigorously terminated due to the gloomy budget in Berlin. Another salvific but rather short-sighted solution at the time was the sale of more than half of municipal social housing, such as the sale of 70,000 apartments of the municipal housing company GSW to an international consortium of investors led by Goldman-Sachs. In a study published in 2017, former Green politician Jan Kuhnert and political advisor Olof Leps point out that more than 315,000 of the originally more than 585,000 municipal apartments have been sold since the fall of the Berlin Wall.
“The current administrative apparatus of the Senate has become incredibly complicated. By sharing competencies, decisions are unnecessarily protracted and paralyse natural market processes. In the past, for example, politicians have failed to initiate social construction measures. Many wrong decisions have been made. Unfortunately, the current government is still denying reality. It is vital to take responsibility for the mistakes of the past and not to get lost in conflicts of competence,” says Amann.
Time for a new housing policy
Every day the media talk about gentrification and the expulsion of socially weaker tenants from their homes. Given the current enormous demand, this is a completely natural process if the creation of small and medium-sized apartments in the low-price segment does not take place. The real estate market is currently being held up by newcomers to Berlin. A free average apartment of 70 square metres costs almost 400,000 euros on the market, i.e. 5,500 euros per square metre, a rented apartment is available for 3,800 euros per square metre. So if you cannot afford an apartment for 400,000 euros, you buy a rented apartment and register your own requirements.
“The current administrative apparatus of the Senate has become incredibly complicated. By sharing competencies, decisions are unnecessarily protracted and paralyse natural market processes. In the past, for example, Another phenomenon we have observed is also causing stagnation on the housing market: Crazy situations arise with tenants who are still sitting on cheap long-term rental contracts, either subletting their apartments and making a profit to live elsewhere. Or they are wealthy enough to own their own investment properties, but only pay a small rent in a Berlin apartment and accept that the apartment will remain in need of renovation.
“The Berlin government needs innovative impulses and an open and positive attitude towards economic processes, as well as a purposeful orientation in order to create a new administrative system that can quickly initiate housing policy decisions. Politicians are now being asked to set priorities, namely the creation of small and medium-sized housing in the low-price segment. An innovative example is the cheap chain Aldi Nord, which plans to build 2,000 apartments in Berlin. We need more such projects. Otherwise this will soon have a negative effect on the entire Berlin economy.”
Notes for editors:
Spiegel, For Rent at Aldi and Lidl
Telebörse, There’s no real estate bubble in Berlin
Tagesspiegel, Berlin Remains Expensive
wahl.de, Who owns the city?
About Black Label Properties:
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