The Berlin government approved a five-year rent freeze and cap in a bid to tame the German capital’s exploding housing costs.
BERLIN — The throng of people blocked the sidewalk outside a gray building on Sonnenalle, the main drag through the German capital’s hip district of Neukölln.
Property values and rent prices in Berlin have exploded in recent years, making it one of the fastest-growing real estate markets in the world. While the average rent remains, surging costs have been a particular burden for residents of a city where salaries are relatively low, public housing stock is scarce and more than two-thirds of the population rents rather than owns.
“There is an attempt in lots of countries now to increase the amount of control on rent, but none as extreme as Berlin,” said Christine Whitehead, a professor in housing economics at the London School of Economics.Historically, home-ownership is low in Germany, particularly in urban areas. Of course, in socialist East Berlin, property ownership was practically nonexistent until after the fall of the wall. But even after reunification, renting was considered a stable, practical option.
The price rise brought with it property speculation and many residents of Berlin — a mecca for artists and political and social activism — have balked as large U.S. property firms such as BlackRock and Berkshire Hathaway have entered the market.Buoyed by speculation Berlin rental prices 30 percent over the past five years, according to Empirica, a real estate market data provider. That is double the rate of London’s rise over the same period.
“The kind of interventions being talked about here are pretty radical measures,” said Michael LaFond, an affordable housing activist. “In Berlin, the government is considering measures that people in [other] cities just wouldn’t get.” “It leads the housing market straight into a socialist planned economy,” said Jan-Marco Luczak, the Christian Democrats’ spokesman for legal policy.Backers have included the German Trade Union Confederation, which argues that rents have reached a level that normal workers simply cannot afford.
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