Is there any hope for Berlin’s strained rental market?

According to Investment Bank Berlin’s 2023 housing market report, published earlier this month, found rent prices, excluding utilities, rose from €5.75 per square metre in 2014 to €13.99 per square metre in 2023. 

The average asking rent prices leapt to €19.85 per square metre for newly built flats. 

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Tale of 'two housing markets'

Dr. Hinrich Holm, chairman of the Board of Investment Bank Berlin (IBB), said in the report the current state of Berlin’s housing market reveals a challenging situation for renters. 

“Berlin basically has two housing markets,” he said.  “One with moderate prices for existing rental agreements and one with high rents on offer. We must therefore expand the range and at the same time offer apartments subject to rent and occupancy in order to provide low-income population groups with social housing."

The sharp rise in Berlin’s population after war-related refugee migration and the end of the pandemic isolation rules is partially to blame, he added. Nearly 80,000 people moved to Berlin after the start of Russia’s war in Ukraine in February 2022. 

Construction unlikely to solve Berlin apartment shortage

Construction for new builds is back in swing and has reached the levels seen in the mid-1990s after the wall fell. 

For the first time building completions exceeded the number of building permits issued. That amounted to the completion of 17,310 apartments which is 1,400 more than in 2021.  

Christian Gaebler, Senator for Urban Development, Building and Housing, said new construction could not immediately solve Berlin’s apartment shortage. 

“Housing construction is not meeting demand at the moment,” he said. “The causes are complex: rising land and construction costs, delivery bottlenecks, a shortage of skilled workers and also the development of interest rates.”

With a construction backlog of more than 62,000 apartments and a realisation rate of 86.5 percent, it is predicted that the majority of apartments will become available over the next few years. But that will not help those in the market for an apartment today. 

READ ALSO: Why does Germany keep missing its house building targets?

Berlin housing crunch increases competition

Molly Harison, an American English teacher in Berlin, found her current apartment through the website wg-gesucht. She said it was tough to find reasonably priced apartments within The Ring -- what Berliners dub the part of the city encircled by the S-Bahn -- and avoid potentially predatory renting situations during her search. 

“With all of the expats and foreigners that are moving here, rent is really high, unless you find a questionable living situation or an honest person,” Harison told The Local. “The amount of people I know who are renting out rooms in their apartment, and the person in the apartment is paying the majority of the rent is wild.”

Harison said competition was fierce to find her current living situation.  

“There’s just not a lot of long-term rental contracts because as soon as they’re up someone snatches them and they’re gone,” Harison said. 

“There were days where I’d try to go on and find things it would be like as soon as I had messaged three people, those same ads from those three people would be gone because someone else had already put the deposit down.”

Lucy, an Italian digital marketer who moved to Berlin in March to start a new job, agreed. 

“I definitely needed to be consistent with my search, I checked the posts twice a day and sent a lot of messages,” she told The Local. “It helped me to be one of the first people to send a message to the landlord, like as soon as they posted the offer.” 

Lucy said this method paired with some knowledge of German helped her find a place within her budget in just under three weeks. 

Still, it can also be a struggle to find long term housing that offers Anmeldung, or official registration at a German residence, which is a requirement for long term visas and work permits.  

“It was quite hard to find a place that was legit for the Anmeldung, I've noticed that most of the time it's not possible,” Lucy said. 

Anmeldung is required to open some bank accounts, get a tax identification number for work, and sign up for wifi in Germany. Legally residents are required to register their address within two weeks of moving.  

And housing issues in Berlin have spread outside of the city’s metro area. Nearby cities like Potsdam also recorded marked rises in asking rent prices as some commuters choose to move outside of Berlin's city limits for housing.  

But while rents in Berlin have soared to record highs, housing prices for those looking to buy are not as bleak. The prices of condominiums and one and two family homes bucked the trend and declined slightly from previous years. 

Condominium prices stagnated for the first time since the survey began analysing Berlin housing data. 

In 2023, condominiums were advertised for an average of €5,746 per square metre. The median for new condominium buildings fell by 4.4 percent to just over €8,000 per square metre. 

The median home price also fell 9.5 percent to €639,000. 

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