> The average rent across all flats in Berlin is €7.67 per sq metre.
Clearly that is not sustainable. That is laughably low rate for such city specially for German incomes. With that and say 50 sqm apartment I would expect average net income to be 1278 with the 30% income rule... Or bit more depending on what is included.
The market was a tenant's paradise and correspondongly bad for landlords… and then many landlords moved to a different market.
This has happened before, for example there have been cases where governments set the price of bread below productions costs, which pleased the poor people in the cities until the farmers and bakers reduced their production of the loss-making bread.
Could so have easily mentioned the UK where the same issues exist.
but chose not to.
Its easy to blame those damn Germans rather than focus what is going on at home.
isnt this called deflection
This is a classic example:
Back in the late 90's, wellafter all the social housing had been sold off and people were despecrate to find a home.
I had a phone call from a property management company asking if I would be interested in taking on a contract to maintain some of their property portfolio.
I went to see him at his very large home in Weybridge. that obscenely rich area.
He told me that he had just bought 19 properties at a local development in Feltham.
These properties were advertised as affordable housing for the local people.
But this guy, who had a lot of money bought 19 of them. How did this even happen?
He then rented out all these brand new properties for £1,600 per month mostly to staff from the Heathrow airport. Those tenants would then in effect be paying the mortgage this rich guy had taken out to buy the 19 properties.
netting him a very nice £30,400,00 rent payments each month or £364,800,00 per annum
This article takes a typically political and ideological view of the situation.
Rent controls never solve issues, in fact they make them worse by doing the opposit of what would help (they reduce supply and increase demand, while the opposite is needed).
Here the market is simply finding a way around rent controls because the demand is so high vs. supply.
I think this is a little too simple to be correct.
For those who aren't familiar with the details, German law makes the cities compute and update a set of average rents based on location, standard and IIRC four other criteria. It's a fairly comprehensive set of prices. Then there are separate sets of rules for when ① an existing rent is below that level ② an existing rent is above and ③ a landlord and tenant sign a new contract.
The third case is the most interesting, because it restricts landlords to asking for 10% over the computed average for that kind of apartment. This limits inflation, which I think is the reason the German word for it is "Bremse" (brake). Effectively, landlords can double their asking prices in ten years but not in two. Is that so strict that it explains why there's little new construction? I suspect not.
I suspect that there are several reasons, and that the demographic trends are more important than the restricted inflation. Landlords can read the graphs and see that there'll be fewer would-be tenants in 20-30 years.
Not sure what is too simple or incorrect... Prices are skyrocketing (even if using a 'loophole') because that's what the market can bear. There is high demand able to pay vs. restricted supply. And, again, rent controls are not going to solve the underlying issue because they factually always do the opposite of what is needed to bring inflation down.
Rents are always going to be expensive in top tier cities, and supply always restricted anyway. So perhaps this are simply the real market prices without rent controls...
There's high demand now but a new building has to earn its keep for many decades.
They're skyrocketing because of x, and x is because of y, and y is… the ultimate reason is that too little is being built. AFAICT too little is being built because while it's easy to find tenants for a new building now it'll probably become difficult within the lifetime of a new building.
> The average rent across all flats in Berlin is €7.67 per sq metre.
Clearly that is not sustainable. That is laughably low rate for such city specially for German incomes. With that and say 50 sqm apartment I would expect average net income to be 1278 with the 30% income rule... Or bit more depending on what is included.
The market was a tenant's paradise and correspondongly bad for landlords… and then many landlords moved to a different market.
This has happened before, for example there have been cases where governments set the price of bread below productions costs, which pleased the poor people in the cities until the farmers and bakers reduced their production of the loss-making bread.
Could so have easily mentioned the UK where the same issues exist.
but chose not to.
Its easy to blame those damn Germans rather than focus what is going on at home.
isnt this called deflection
This is a classic example:
Back in the late 90's, wellafter all the social housing had been sold off and people were despecrate to find a home.
I had a phone call from a property management company asking if I would be interested in taking on a contract to maintain some of their property portfolio.
I went to see him at his very large home in Weybridge. that obscenely rich area.
He told me that he had just bought 19 properties at a local development in Feltham.
These properties were advertised as affordable housing for the local people.
But this guy, who had a lot of money bought 19 of them. How did this even happen?
He then rented out all these brand new properties for £1,600 per month mostly to staff from the Heathrow airport. Those tenants would then in effect be paying the mortgage this rich guy had taken out to buy the 19 properties.
netting him a very nice £30,400,00 rent payments each month or £364,800,00 per annum
I declined the contract
This article takes a typically political and ideological view of the situation.
Rent controls never solve issues, in fact they make them worse by doing the opposit of what would help (they reduce supply and increase demand, while the opposite is needed).
Here the market is simply finding a way around rent controls because the demand is so high vs. supply.
I think this is a little too simple to be correct.
For those who aren't familiar with the details, German law makes the cities compute and update a set of average rents based on location, standard and IIRC four other criteria. It's a fairly comprehensive set of prices. Then there are separate sets of rules for when ① an existing rent is below that level ② an existing rent is above and ③ a landlord and tenant sign a new contract.
The third case is the most interesting, because it restricts landlords to asking for 10% over the computed average for that kind of apartment. This limits inflation, which I think is the reason the German word for it is "Bremse" (brake). Effectively, landlords can double their asking prices in ten years but not in two. Is that so strict that it explains why there's little new construction? I suspect not.
I suspect that there are several reasons, and that the demographic trends are more important than the restricted inflation. Landlords can read the graphs and see that there'll be fewer would-be tenants in 20-30 years.
Not sure what is too simple or incorrect... Prices are skyrocketing (even if using a 'loophole') because that's what the market can bear. There is high demand able to pay vs. restricted supply. And, again, rent controls are not going to solve the underlying issue because they factually always do the opposite of what is needed to bring inflation down.
Rents are always going to be expensive in top tier cities, and supply always restricted anyway. So perhaps this are simply the real market prices without rent controls...
There's high demand now but a new building has to earn its keep for many decades.
They're skyrocketing because of x, and x is because of y, and y is… the ultimate reason is that too little is being built. AFAICT too little is being built because while it's easy to find tenants for a new building now it'll probably become difficult within the lifetime of a new building.