Now that most of the restrictions due to the corona pandemic have been lifted, the normal madness on the German real estate market is beginning. Rents and purchase prices are rising almost everywhere in Germany, unaffected by the global crisis. With one big exception: Berlin. The general trend of increasingly seems to have been broken there for the time being.
At least that is what most statistics from the past few months point to. A lot has happened on the Berlin housing market since the introduction of the highly controversial rent cover at the end of February. The law could soon be cashed again by the highest level before the Federal Constitutional Court, but even then it would go on in the capital city in a lumpy manner. After all, the Berliners are planning their next coup this summer. But one after anonther.
The law on rent limitation, as the rent cover is officially called, has been in force since February 23. And the market apparently immediately anticipated the new regulation. "The asking rents for affected apartments have fallen by eight percent within one year," says the Immowelt apartment portal after evaluating its own advertisements. "A year ago, a median of 11 euros was asked for the square meter, currently it is 10.10 euros." For the analysis, the rents offered in Berlin from January to May 2020 were compared with the same period in the previous year.
The fact that there could be a connection with the pandemic is considered impossible, since such a negative trend cannot be observed anywhere else in Germany. This is the result of the Housing Index Germany, an industry study by the Institute for Research and Consulting for Housing, Real Estate and the Environment. "In contrast to the other German metropolises, the development of asking rents in Berlin continues to relax," it says there. On average, advertised rents fell by almost two percent in the first three months of 2020 compared to the previous quarter. The federal capital has "said goodbye for a long time" from the top 50 most expensive real estate markets in Germany.
Even an even broader survey hardly allows any other conclusion than that the rent cover works. The company empirica regio evaluates data for the real estate industry from dozens of sources, takes into account the advertisements of the large real estate portals as well as smaller Internet offers and print media. From this, the company calculates the weekly deviation on the rental market from the price that applied in early January 2019. Especially in April and May, there is a clear downward trend, with minus values of up to 9.5 percent.
However, another effect of the new law can be seen. Empirica also counted the total number of apartments advertised in Berlin. And this value is falling sharply. To a certain extent, this also applies to other cities and can probably be attributed to the contact restrictions due to the Corona pandemic, after all, visits were only possible to a very limited extent. But this development is much more pronounced in Berlin. Compared to January 2019, around 40 percent fewer apartments were offered in April and May of this year for several weeks in a row. Cai-Nicolas Ziegler, CEO of Immowelt, has also observed this and explains it as follows: "The rental cover means that many rental properties are offered for sale due to their low profitability and are therefore withdrawn from the rental market."
Nevertheless, construction is likely to be no less in Berlin this year than before, although many experts had warned exactly that the new building activity would be stalled by the rental cover. In any case, building permits for around 5,300 apartments were granted in the first three months of this year - almost ten percent more than in the same period in 2019. This may be due to the fact that the rental cover only applies to apartments that were completed before 2014. New buildings are therefore excluded. However, it can be seen from the advertisements for these apartments that their prices have increased all the more drastically. According to Immowelt, they are 17 percent higher than last year.