Re:Berlin now home to soaring rents and rising tensions
by JanSt on Thursday April 26, 2018 @04:14AM
(#16929941)
We are talking about high rents, not high buying prices
Re:Berlin now home to soaring rents and rising tensions
by dx034 on Thursday April 26, 2018 @10:45AM
(#16932293)
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.
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.