Berlin rent index 2019. Are not all landlords exploiters?

Rent mirror 2019: The real estate market in the German capital is working. Three quarters of the housing stock under 7 Eur/m². Housing remains affordable and the situation difficult. 

by Peter Guthmann Published on:

The Berlin property market works.

What's going on in Berlin? Aren't all landlords speculators in the end? According to the rent index for 2019, rents are only rising by around 2.5 percent annually. The survey and calculation of rents in Berlin is based on about 1.4 million apartments relevant to the rent index and shows the rent level at the cut-off month of September 2018. Perhaps the Senate will finally come to a clear and fair assessment of the Berlin real estate market, the owners and the investors with the rent index 2019. After all, everything indicates that the rental market in Berlin is not out of control, but rather a normal metropolitan market segmented into submarkets. What is being celebrated as a political victory reveals at second glance what everyone knows: Only building relieves the pressure. 

Politics should help tenants to overcome their diffuse fears

For the Senate and the districts it will become more difficult in the future to put all landlords in a corner and to lump together as speculators. The Senate's housing market policy tools, which have been in place for many years, have always been effective and they are now even more effective with the comprehensive introduction of milieu protection areas. Tenants' pre-emption rights, special protection against dismissal for personal use, environmental protection and conversion regulations are the safest legally conceivable network for tenants. Even if a new owner wanted to make the most of it, he could neither "modernize his tenants out" in Berlin, nor put them on the street, nor absurdly increase the rents in the portfolio. The new rent index reveals the excessive level at which the public discourse on rents has been conducted in the last two to three years and how far it has come from reality. In fact, Berlin's senate and district policy for short-term propaganda gains has deprived itself of the long-term fruits of its policy. Instead of painting slogans on posters with tenants and stirring up fears, city councillors should explain to tenants their rights. For example, that they cannot be dismissed without justifiable reason, nor can they be modernised out or otherwise disposed of, especially in the context of milieu protection. Only very few landlords have ever intended to do so. The new rent index is a chance to bury the legend of the greedy landlord speculator and remove the wedge between landlords and tenants. 

There are many segments. Why not also high-priced ones?

With about 1.4 million flats, the Berlin rent index covers about three quarters of the nearly 1.95 million flats in Berlin. Around 550,000 apartments are not included in the rent index. These include new rentals, new construction projects, comprehensively refurbished units and, for example, furnished units or temporary rentals. It is right and normal that this market exists. If this were not the case, there would no longer be a free economy.  For apartments in the "non-rental index" segments, rents on offer are not surprisingly significantly higher than within the rent index. It would be untrustworthy to say anything else. Landlords must refer to the rent index also with new lettings. But there can be no market without new rentals above the rent index. Tenants know that flats are being deprived from use and age. So nothing is more normal than to renovate, refurbish or modernize apartments comprehensively before a tenant change. A landlord must obtain the associated investments from the rent. How could it be otherwise? In other respects, municipal landlords face identical challenges. However, the gap between investments and rents is borne by the taxpayer over the long course in the form of subsidies. The rents of municipal landlords are also rising. But these rent increases are borne by the community. 

The free rental housing market in Berlin

Let's take a look at the free market for new rentals in Berlin. In our analyses we use the rental offers of the usual portals and daily newspapers in Berlin for our analyses. Municipal housing offers are offered on other channels. These rental data are not available to us for evaluations, which means that the value determined by us is distorted despite the use of the Median. In general, we can observe very different trends in the urban area. In particular, the locations that have been hyped in recent years are currently losing some of their dynamism. Classical and particularly high-quality sites are in turn growing strongly. If we divide the market into price segments, it becomes clear that from 2012 to today the price segment of 5.00 to 8.00 EUR/m² has almost disappeared from the market. But also taken together, the segments up to EUR 11.00/m² residential space account for more than half of new lettings on the free market. That is all, but no usury. And at the same time there is a noticeable slowdown in the increase in rents across the entire city area in 2019. 

12 Months Berlin: Rental Offers

If we chart the past 12 months on the Berlin rental housing market, the supply situation looks as shown below. We have clustered the supply by year of construction and apartment size. It can be seen that there is a broad spread of rental offers in all building year classes. It also shows that the classic old building in Berlin and new building projects are in line. 

Rental development in the five-year period

Our rent index table also demonstrates that rent increases are slowing down. According to our evaluations the median rent in the 12-month period is 13.15 EUR/m². There were about 23,020 apartments offered for rent. The new contract rents developed in 60 months around about 23.70 %.

Mietindex Berlin

Period Existing buildings Median Offer price Index (base 10 years = 100) New buildings Median Offer price Index (base 10 years = 100)
Current quarter 13.55 EUR/m² - 28.05 EUR/m² -
1 Year 12.15 EUR/m² 11.70 % 23.10 EUR/m² 21.40 %
3 Years 10.85 EUR/m² 25.00 % 18.60 EUR/m² 50.80 %
5 Years 10.95 EUR/m² 23.70 % 15.65 EUR/m² 79.30 %

More information

The situation in the Berlin districts and a comprehensive view of the real estate market in Berlin can be found in our market report.