Usually when we're talking about housing affordability, it's not just a shift from interest to principal. It's the total (principal + interest) cost skyrocketing.
Higher interest rates might depress prices for cash buyers, but it seems doubtful that normal people getting mortgages would be any better off.
Housing supply also plays into it. We know how to build lots of cheap housing, but instead we create restrictions to ensure it is never built, then wonder why there is a housing crisis.
It is a strong culture of "I've got mine, you can pound sand/die on the street" here in the US.
Its quite interesting how most people subscribe to religions that tell them to help and care for their neighbors, community, and those who have fallen on hard times, yet in their own daily lives they actively work to bootstomp the poor. Those beliefs and actions do not reconcile :P
That's because the major belief system in the west is not Christianity, it's actually neoliberalism: Everyone is responsible for their own fortune. So if someone is unfortunate, it must be their own fault and they deserve it. People may call upon their Christian values, but what they actually do is pretty neoliberal.
I remember there are Mexican American politicians in the US who's whole response to their platform against illegal immigration was literally that they're closing the door on people behind them (jumping the border). Understandably there will be people like that, but that they'd get elected and can espouse such beliefs shows that there are people out there with seriously messed up values.
That being said, nothing wrong with being against illegal immigration. It's illegal for a reason. But being a beneficiary of it and not being understanding of it takes a certain type of skill.
In Poland (where I live, although I'm from Italy) they get 50k/y before taxes, but taxes are 19% flat and the cost of living is about half compared to Italy.
Thing is though you can easily live in the Hague or somewhere closer and commute as transport is good. No one is forcing anyone to live in Amsterdam, right? I believe from personal experience that for plenty of London dwellers it's not the commute that puts them off moving out of London rather snobbery about alternatives. What amazes me is how far people are willing to stretch themselves financially due to snobbery. For me personally it's not worth the gamble.
It's important to note Dutch taxes, too. 55k puts you at 4.5k a month gross, but 3k a month net. That's a 36k net salary of which 18k a year goes to rent (50%). And that's for a talented engineer. I know plenty of engineers with salaries around 40k, and the median salary is around 35k for all industries.
On the other hand, 1.5k a month can get you a 2 bedroom 10 minutes from the heart of the city. I'm not sure what you're used to but it isn't that tiny for Dutch standards. Certainly plenty for a single person who can get a single bedroom in a decent location around 1100, too. And if you've got a partner or roommate, it's pretty trivial to pay less than 800 per person.
Further, it's pretty easy to pay much, much less and still have a short commute to work. Again, it's not ideal but it's different from some US situations where you need to live 2 hours outside the city you work in, to afford the rent with the money that job earns you. In Haarlem, Utrecht, Hilversum are all 15-20 minutes away by car or public transport.
But it seems to be getting worse quick, particularly for those who don't have a well-paying job and a family it's a shitty deal, you're essentially forced out of the city because social housing waiting lists are 15 years.
That sounds kind of similar ratios to Barcelona. Do you think its related to them being tourist cities pushing up proeperty prices.
(On a side not Barcelona is pretty strict on AirBnB. Still screw AirBnB, there is no need for residential accommodation to be used as hotels when rents are getting ridiculous like this).
Pff, I'd like to say yes from the narrative and feelings people have in the city, but I haven't seen an empirical study.
Amsterdam is quite strict about airbnb too, entire apartments can only be rented out 30 days a year, but it's hard to regulate. Basically, you can get 150 a night, i.e. 4500 a month for apartments that normally rent for 1500. So there's quite an incentive to break the rules. Basically, if you have one 1500 home, you pay 18k a year, rent it out for three times that (54k), and basically live on a median salary at the cost of managing a single rental. It's pretty crazy.
I'm quite okay with tourists, but I think they should put a big fat tax on them. The notion that there's 7 billion people who may find your city of 1 million people an interesting place to visit, puts the locals at a gigantic demand-disadvantage. It's virtually impossible to compete on free market economics.
But if tourists are still paying 150 a night, but landlords are only getting 75 a night after-tax, then locals who can 'only' pay 50 a night can compete for space, you can keep tourist flows in check but keep it open to tourists too, keep your city open, let tourism sustain the local economy etc.
That having been said, Amsterdam has a few unique problems. For one, it's got an old city centre, the image of which is part of its protected heritage. That's why it's general policy not to build high-up, which means you're limited in your population density and get very expensive housing. In general building upwards is also tricky because it's a city built on swampland. Secondly, the crisis hit pretty hard here and construction halted for a long time and is only now picking up, but with a lot less (labor) capacity than before the crisis which had to be shed off to survive. Then there's the fact there just isn't a lot of space left to build, the Netherlands doesn't really commit to urban sprawl which is great, but also limits the radius of the city. And if you can't go further and you can't build upwards, plus you're not building as fast as you should after a crisis, you've got some big issues.
On the other hand a friend of mine bought a nice apartment (70 sqm +) with basically no mortgage and very low interest and was paying less than 1k including utilities.
It probably depends a lot on the city area. It's true that this apartment was not really in the best neighbourhood, but the metro was close and the apartment was awesome.
Any big urban centers, yes. But there's tons of smaller villages or tiny cities which are losing population.
For a better quality of life for all, we have to start thinking about ways to spread this around more because now it's a one-way stream from low-density areas to high-density areas, the former has no future (it's emptying), the latter becomes unaffordable. (the more density, the more demand/production per square meter, the higher land prices and the higher all costs->prices of any production in that area, not just housing but anything).
Population density can be very valuable (it's efficient, for one), and I'm a big proponent of cities in general, but there are limits. At some point density starts reducing quality of life.
I think you're talking cross-purposes. All else being equal, higher density has the edge in many aspects. But the smaller cities need to build themselves up, rather than (in the tech industry at least) everyone flocking to the one or two hotspots in any country. Why the industry isn't embracing remote work is a mystery to me. I'm fortunate enough to work for a distributed company and the single biggest perk to me is that I don't have to live in SF (or the USA, for that matter).
A small secret: here in Stockholm, the apartment prices have gone down recently; you can buy a 1-2 room apartment and pay less than $700/month in the city center (a down payment is needed though). The salaries for software engineers are typically 70k-100k USD.
That's the thing though, isn't it? If you have the money for a down payment you are probably not in the group of people most affected by rents spiraling up.
The salaries for software engineers are typically 70k-100k USD.
Are they? Most jobs I see seem to pay in the 40-50ksek month bracket. Don't think I've ever seen a 'normal' software engineering job paying over 60ksek. But admittedly it's been a couple of years since I was actively job-searching in Stockholm.
I'm not sure how much the salaries have increased the last couple of years, but I'm regularly seeing offers of 50-60ksek (excluding bonus and options/equity) for a full stack or senior software engineer with a couple of years under the belt. I personally know SWEs that make 100ksek+. Lead SWE positions go for 60-80ksek.
That's interesting. When I have had a quick look at Sweden I was surprised how low the software salaries were (though it wasn't an extensive search). I hear that the cost of living is pretty high. The Swedish bosses i worked for thought that Barcelona apartments were cheap. What would you pay in rent for the apartments you are talking about?
In Berlin too: salaries stay much the same, but rents are skyrocketing. In 2010 a 40sqm apartment was around ~400/500€ in city ring, now they are around 700€, and the price is always without electricity and internet connection, which are extra.
If you look for a 90sqm apartment, you have to plan 1400€ at least. In general, the more rooms you want, the more you have to pay for.
Salaries in start-up land are skyrocketing for high performing employees. SoundCloud had an average salary of ~€90k or something close to it. Lots of dual income, no kid hipster professional couples with tons of disposable income.
I highly doubt that all employees are going to be paid that highly.
The majority of tech jobs in Berlin does not pay even close to €90k per year. That is the problem with averages. You have a few people earning loads and the rest on much lower income. It would be much better to look at the Median income in Berlin.
People who could be working at FANG are pulling 80+k here amongst the well-funded startups or Siemens etc. Google Munich pays over €100k for their standard dev roles, AFAIK. Zurich is substantially higher, but it's genuinely more expensive.
Munich is a rich city and the cost of living is a lot higher there from what I understand. Its like comparing London to almost anywhere else in the UK.
That used to be true.
But lately, the demand has grown bigger and bigger and if you look over some job boards you'll see salary ranges that raise the average handsomely.
On the other hand, 60k still is almost 3 time the average salary in Berlin so it can take you quite far.
Top end of the market here for skilled C++ developers is more like €100-120k. So it's possible to earn a lot more 60k than but you won't do it building CRUD apps for a poorly funded copycat startup.
SoundCloud had plenty of engineers on €90k+. HERE Maps also pays very well. Even a lot of the startups are openly offering ~€80k on StackOverflow and AngelList for genuinely skilled Ruby/JS developers and you can always negotiate a little higher.
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.
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.
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?
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.
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.
The poor people in many cases aren't paying the rents directly. The local governments are renting places at or above market rates to house poor people.
But on the whole the rising rents in Berlin is more due to the influx of European tech workers and the like, rather than refugees.
Another huge reason is that Germany has curbed its subsidized housing program since the early 90s. Every year, hundreds of thousands of apartments fall out of fixed price agreements, but only very few new subsidized housing is built.
(Subsidized housing as in: The government subsidizes your housing project if you agree to fixed rents for a certain period of time, afaik 20 years or so.)
It's not a blip, it's 2% of the entire population. No matter how poor they are, if they live in a house, they're pushing rents up by reducing available houses for everybody else. Some of those displaced people or the people they subsequently displace by moving will surely end up in Berlin because that'll be the next best option for them.
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.
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.
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.
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.
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.
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 ;)
Renting in some place for a long time doesn't give you any leverage against another potential renters. If I want to move to Berlin and am willing to pay more than existing renters, I don't see any reason why I shouldn't be able to do so.
> Lustig pays $300 a month from her $800 disability check for the 570-square-foot apartment, located in a newly fashionable district only a mile from Tiergarten, a leafy city park that's one of Berlin's most popular.
$300 per month for even a small apartment in a good district is incredibly cheap. Why on Earth would you expect to be able to afford such a place on a disability check?
tbh this is a very bad example.
$300 (247€) for 570 square-foot (53m²) are just not realistic for a city like Berlin. The real price for such an appartment (in that district) is around 700-800€.
Not to be "that guy" with the unpopular opinion here, but I'm not even sure if the landlord can even cover the costs for the apartment from what she's paying.
The landlord knew exactly what he was getting into buying a tenanted property rented by someone on WBS social housing. Using your sister to evict your existing tenant is dodgy. I have zero sympathy for trying to game the system and getting caught out by your sister inconveniently dying.
I couldn't find any information in the article that it's WBS social housing. It says "located in a newly fashionable district" which doesn't sound like social housing.
It's not. I missed the 32 years bit and assumed it was WBS because she's receiving long-term disability. Either way, you can't simply buy a building and evict the tenant in Germany. The landlord knew what he was getting into.
It seems you don't understand how renting works in Germany. Tenants have rights very similar to what property owners have in the US, and have the equivalent of California's Proposition 13 to ratecap their rent (just like how property taxes get ratecapped in California).
Its quite refreshing to see a different perspective on housing, as it isn't a fungible commodity like you suggest, where the dollar is the ultimate arbiter. People build their lives around where they live and make deep investments in their community. Some artificial "free" market that is terribly dysfunctional (and irrational) like we have here in the US is a poor choice when most of your society isn't landed gentry.
>Renting in some place for a long time doesn't give you any leverage against another potential renters.
In Europe? Yes it does. If you're a longtime renter in Vienna for example it's almost impossible for the landlord to raise your rent or get you evicted. There's some decades-old contracts with renters paying 200-300€ for a 100m² apartment. These can even be passed on to family.
Many people believe that renting a place for a long time should give you leverage over potential renters. Because it's cruel to rip someone from the place they've lived in for decades, especially if they're older and its hard for them to integrate into a different city or a different district. The people living in a place for a long time are also responsible for making the community attractive in the first place. Local culture depends on the inhabitants.
> Renting in some place for a long time doesn't give you any leverage against another potential renters.
That's just not true in most of Europe. Having lived in several countries now, the laws are usually very tenant oriented: after some time landlords cannot terminate leases in most conditions and the yearly increases are regulated.
> Renting in some place for a long time doesn't give you any leverage against another potential renters.
I disagree. I also disagree that living somewhere gives you a special-citizen's pass. It's somewhere in between. You want to give room for the market, but you also want to consider cities are a function of their neighbourhoods, their communities, the networks, the people, the bonds, shared history, local culture etc. You can't just break up an existing community for money. You need to find middle ground, let the market operate while trying to work to keep the community intact.
I mean, I know it's really easy (and cheesy) to say these words. Finding that balance is really hard, and at some point there is a trade-off between government intervention in the market or letting (sometimes vulnerable) people fend for themselves. And that isn't easy.
That having been said, $300 a month for a $60k apartment isn't little by European standards. That's a 6% rental yield, it isn't low.
It seems rather far fetched to have such low rents over time in a big EU city like Berlin. It is unavoidable that capital will flow into the city and compete for real estate. Not only that, but how they expect to get investments if you cannot increase rent?
Having a housing market based mostly on rent obfuscates the other side of housing, namely the owners need to take care of said house.
If transportation is good enough, it isn’t that unreasonable. While I am impressed by Berlin’s public transport, that’s by comparison with the UK — Berlin shares one problem with the UK, however, and that is that high speed intercity trains feom nearish cities take an hour, but so to do internal trams, trains, S-Bahns and U-Bahns coming from the inside edge of the city.
It's an endlessly recurring phenomenon of people that when they don't have any legal right to something but use it for a long time, they believe they have a permanent right to it. If you really value living somewhere, you can pay for that privilege and exclude other people who don't want it as much as you do. Somebody has to miss out when there's limited supply of housing.
Berlin actually has a lot of potential supply, there's little geographical restriction and generally good public transport. Zoning laws are also comparably friendly (at least compared to SF and London). But real estate projects still take 3-5 years to complete.
That seems to be a common problem. In New Zealand, especially Auckland, there's a housing shortage so the local governments have relaxed zoning restrictions. But there's also a shortage of builders so they can't build fast enough and housing will stay expensive for years until that catches up.
Well, it's not like the rents stay static until death. As the owner you can still find enough reasons to increase the rent for 2.5-3% each year which is above the official inflation rate.
I spent a few months last year in AirBnBs in Berlin, looking for a permanent place.
From an outsider’s perspective, Berlin rents are ridiculously low unless you’re in the inner ring. Low enough I could cover the rent with money left over entirely from the rent I was collecting from a one bed flat I own in a small village in the UK, at the worst point of the €-£ exchange rate. Heck, I could usually do that with the AirBnBs too, despite their markups.
Yes, there is definitely a housing shortage, but as they have rent control the problem I experienced was too many people viewing each place. In one case, there were about 80-100 people viewing the same appartment as me while I was there. Not that my experience is at all incompatible with locals having more problems from high unemployment or low wages.
Out of interest, where in Berlin were the rents so cheap? I recently moved to the Berlin area and found rents to be on par with London for a 3 bedroom place.
I have been visiting Berlin for the better part of 8 years and I am astounded at the increase I have seen in living costs. Food and entertainment has also gone WAY up.
In my opinion Berlin is by no means the "cheap" city that it once was. When you combine that with the average salary in Berlin being lower than in other big German cities (and a lot lower than London) then it has become a real issue as of late for most people.
In no way Prenzlauer Berg is cheap: it's a hip area, one of the most expensive, with Mitte in leaders. The cheap are Moabit, Wedding, Neukolln, Pankow. You can move further to Steglitz, Marzahn, Lichtenberg.
The places I saw in Prenzlauerberg were cheap. Can’t comment on averages as I wasn’t looking to invest in the general market, just get a place for myself.
The problem with rent control is that it causes more harm than good.
Great for the lucky few that get a rent controlled apartment. Bad for people that don't and for landlords that now can't charge enough rent to cover the mortgage.
In Germany mortgages are with fixed rates, so no surprises in interests. It's a somewhat incompetent landlord that takes higher mortgage than what the rent covers.
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[ 3.5 ms ] story [ 165 ms ] threadThat combo seems to blow up house prices and rents.
Higher interest rates might depress prices for cash buyers, but it seems doubtful that normal people getting mortgages would be any better off.
Its quite interesting how most people subscribe to religions that tell them to help and care for their neighbors, community, and those who have fallen on hard times, yet in their own daily lives they actively work to bootstomp the poor. Those beliefs and actions do not reconcile :P
This isn't the guy they highlighted (person was a man), but similar: https://www.csmonitor.com/USA/2011/0913/Susana-Martinez-Can-...
That being said, nothing wrong with being against illegal immigration. It's illegal for a reason. But being a beneficiary of it and not being understanding of it takes a certain type of skill.
Not sure about Iași or Brașov. Bucharest was expensive before and not quite to recommend.
In Poland (where I live, although I'm from Italy) they get 50k/y before taxes, but taxes are 19% flat and the cost of living is about half compared to Italy.
Go figure...
Devs are paid terribly here. Yet I've seen HR jobs for tech firms offering over 50k. Messed up.
Same problem, salaries are around 55-70k for a decent engineer and rent is at least 1.5k month for a tiny place.
To me it's close to insane.
On the other hand, 1.5k a month can get you a 2 bedroom 10 minutes from the heart of the city. I'm not sure what you're used to but it isn't that tiny for Dutch standards. Certainly plenty for a single person who can get a single bedroom in a decent location around 1100, too. And if you've got a partner or roommate, it's pretty trivial to pay less than 800 per person.
Further, it's pretty easy to pay much, much less and still have a short commute to work. Again, it's not ideal but it's different from some US situations where you need to live 2 hours outside the city you work in, to afford the rent with the money that job earns you. In Haarlem, Utrecht, Hilversum are all 15-20 minutes away by car or public transport.
But it seems to be getting worse quick, particularly for those who don't have a well-paying job and a family it's a shitty deal, you're essentially forced out of the city because social housing waiting lists are 15 years.
(On a side not Barcelona is pretty strict on AirBnB. Still screw AirBnB, there is no need for residential accommodation to be used as hotels when rents are getting ridiculous like this).
Amsterdam is quite strict about airbnb too, entire apartments can only be rented out 30 days a year, but it's hard to regulate. Basically, you can get 150 a night, i.e. 4500 a month for apartments that normally rent for 1500. So there's quite an incentive to break the rules. Basically, if you have one 1500 home, you pay 18k a year, rent it out for three times that (54k), and basically live on a median salary at the cost of managing a single rental. It's pretty crazy.
I'm quite okay with tourists, but I think they should put a big fat tax on them. The notion that there's 7 billion people who may find your city of 1 million people an interesting place to visit, puts the locals at a gigantic demand-disadvantage. It's virtually impossible to compete on free market economics.
But if tourists are still paying 150 a night, but landlords are only getting 75 a night after-tax, then locals who can 'only' pay 50 a night can compete for space, you can keep tourist flows in check but keep it open to tourists too, keep your city open, let tourism sustain the local economy etc.
That having been said, Amsterdam has a few unique problems. For one, it's got an old city centre, the image of which is part of its protected heritage. That's why it's general policy not to build high-up, which means you're limited in your population density and get very expensive housing. In general building upwards is also tricky because it's a city built on swampland. Secondly, the crisis hit pretty hard here and construction halted for a long time and is only now picking up, but with a lot less (labor) capacity than before the crisis which had to be shed off to survive. Then there's the fact there just isn't a lot of space left to build, the Netherlands doesn't really commit to urban sprawl which is great, but also limits the radius of the city. And if you can't go further and you can't build upwards, plus you're not building as fast as you should after a crisis, you've got some big issues.
It probably depends a lot on the city area. It's true that this apartment was not really in the best neighbourhood, but the metro was close and the apartment was awesome.
For a better quality of life for all, we have to start thinking about ways to spread this around more because now it's a one-way stream from low-density areas to high-density areas, the former has no future (it's emptying), the latter becomes unaffordable. (the more density, the more demand/production per square meter, the higher land prices and the higher all costs->prices of any production in that area, not just housing but anything).
Population density can be very valuable (it's efficient, for one), and I'm a big proponent of cities in general, but there are limits. At some point density starts reducing quality of life.
That's the thing though, isn't it? If you have the money for a down payment you are probably not in the group of people most affected by rents spiraling up.
Are they? Most jobs I see seem to pay in the 40-50ksek month bracket. Don't think I've ever seen a 'normal' software engineering job paying over 60ksek. But admittedly it's been a couple of years since I was actively job-searching in Stockholm.
If you look for a 90sqm apartment, you have to plan 1400€ at least. In general, the more rooms you want, the more you have to pay for.
The majority of tech jobs in Berlin does not pay even close to €90k per year. That is the problem with averages. You have a few people earning loads and the rest on much lower income. It would be much better to look at the Median income in Berlin.
People who could be working at FANG are pulling 80+k here amongst the well-funded startups or Siemens etc. Google Munich pays over €100k for their standard dev roles, AFAIK. Zurich is substantially higher, but it's genuinely more expensive.
EDIT: I mean for experienced engineers.
SoundCloud had plenty of engineers on €90k+. HERE Maps also pays very well. Even a lot of the startups are openly offering ~€80k on StackOverflow and AngelList for genuinely skilled Ruby/JS developers and you can always negotiate a little higher.
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-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.
However, since the cheap money from the banks, more people are orienting to buy than rent, which is quite different from the past.
- 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.
The poor people in many cases aren't paying the rents directly. The local governments are renting places at or above market rates to house poor people.
But on the whole the rising rents in Berlin is more due to the influx of European tech workers and the like, rather than refugees.
(Subsidized housing as in: The government subsidizes your housing project if you agree to fixed rents for a certain period of time, afaik 20 years or so.)
This seems to be a possible hypothesis. Could you validate it?
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.
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.
> Lustig pays $300 a month from her $800 disability check for the 570-square-foot apartment, located in a newly fashionable district only a mile from Tiergarten, a leafy city park that's one of Berlin's most popular.
$300 per month for even a small apartment in a good district is incredibly cheap. Why on Earth would you expect to be able to afford such a place on a disability check?
Not to be "that guy" with the unpopular opinion here, but I'm not even sure if the landlord can even cover the costs for the apartment from what she's paying.
Its quite refreshing to see a different perspective on housing, as it isn't a fungible commodity like you suggest, where the dollar is the ultimate arbiter. People build their lives around where they live and make deep investments in their community. Some artificial "free" market that is terribly dysfunctional (and irrational) like we have here in the US is a poor choice when most of your society isn't landed gentry.
It comes down to what you think money is for. In Europe the general consensus is that there are constraints the effects money should have.
In Europe? Yes it does. If you're a longtime renter in Vienna for example it's almost impossible for the landlord to raise your rent or get you evicted. There's some decades-old contracts with renters paying 200-300€ for a 100m² apartment. These can even be passed on to family.
That's just not true in most of Europe. Having lived in several countries now, the laws are usually very tenant oriented: after some time landlords cannot terminate leases in most conditions and the yearly increases are regulated.
I disagree. I also disagree that living somewhere gives you a special-citizen's pass. It's somewhere in between. You want to give room for the market, but you also want to consider cities are a function of their neighbourhoods, their communities, the networks, the people, the bonds, shared history, local culture etc. You can't just break up an existing community for money. You need to find middle ground, let the market operate while trying to work to keep the community intact.
I mean, I know it's really easy (and cheesy) to say these words. Finding that balance is really hard, and at some point there is a trade-off between government intervention in the market or letting (sometimes vulnerable) people fend for themselves. And that isn't easy.
That having been said, $300 a month for a $60k apartment isn't little by European standards. That's a 6% rental yield, it isn't low.
Having a housing market based mostly on rent obfuscates the other side of housing, namely the owners need to take care of said house.
Seriously, what kind of argument is that. Just because other cities are expensive as fuck, Berlin has to be as well?
From an outsider’s perspective, Berlin rents are ridiculously low unless you’re in the inner ring. Low enough I could cover the rent with money left over entirely from the rent I was collecting from a one bed flat I own in a small village in the UK, at the worst point of the €-£ exchange rate. Heck, I could usually do that with the AirBnBs too, despite their markups.
Yes, there is definitely a housing shortage, but as they have rent control the problem I experienced was too many people viewing each place. In one case, there were about 80-100 people viewing the same appartment as me while I was there. Not that my experience is at all incompatible with locals having more problems from high unemployment or low wages.
I have been visiting Berlin for the better part of 8 years and I am astounded at the increase I have seen in living costs. Food and entertainment has also gone WAY up.
In my opinion Berlin is by no means the "cheap" city that it once was. When you combine that with the average salary in Berlin being lower than in other big German cities (and a lot lower than London) then it has become a real issue as of late for most people.
Great for the lucky few that get a rent controlled apartment. Bad for people that don't and for landlords that now can't charge enough rent to cover the mortgage.
David Ricardo rides again.