Bursting at seams

Germany’s housing crisis is now an expat problem

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Homing in on a problem. Source: Imago

People moving from abroad to Munich have huge problems finding places to live. Expat forums are filled with tips, and an English-speaker advised newcomers to submit CVs, pay slips, credit histories and references to any potential landlords. Apartment hunters often wind up starting jobs while they urgently hunt for a home in the evenings. They sleep on friends’ couches, mull bribes and swap stories of scams. “The housing market is a nightmare,” said one employee for Internations, a website for expats.

One-third of cities in Germany lack enough housing, with the shortage particularly acute in Berlin, Munich and Cologne. The big cities in Germany need 1.9 million more homes and the problem has filtered all the way to the top. Chancellor Merkel has committed to building an additional 100,000 flats for low earners during this coalition, investing an additional €5 billion.

The shortage affects everyone. Traffic-light posts at nearly all of Berlin’s intersections are papered over with notes posted by families seeking homes, many offering rewards. One senior manager moving from Cologne to Berlin spent thousands on AirBnBs, visiting his family back home at weekends. He stored clean laundry at the office and his other possessions in a car parked outside the city. “I don’t want my coworkers to see all that,” he confided.

More tenants than in UK or US

People with lower incomes struggle more. Robbi, an intern from Italy, couldn’t afford a room in a shared apartment. She fell victim to a would-be landlord who asked her to transfer a sum in advance; he then disappeared. Luckily, through friends of friends, she found someone offering discounted rent in exchange for house-sitting, allowing her to sublet for a few months. The situation is even harder for Syrian families urgently looking for apartments, too.

As growing numbers of people move to German cities, prices are rising steeply. Germany’s housing market is different from those in the UK and the US, for example. Half of the people living here still rent. Prices, historically, are lower than in cities such as London or San Francisco, but the speed at which they are rising is a cause of concern, as is the shortage of housing.

After years of failed policies, politicians are now responding. Economics Minister Peter Altmaier, speaking ahead of a housing summit on Friday, said the only way to alleviate the housing crisis would be to speed up construction by relaxing building regulations and approvals.

Politicians from across the spectrum are matching his proposals with their own. The CDU suggested an incentive for investors, while Social Democrats and Greens want more intervention from the government. Some now regret the outcome of a referendum on whether new homes could be built at Tempelhof, the former airfield in the middle of the city. Voters said no in 2014. “Back then, it sounded like the whole field would be built over. Maybe that was a mistake,” Berlin’s mayor, Michael Müller, told Tagespiegel.

Relief at the bottom

As Ms. Merkel opens the summit, the government supported an increase in the housing allowance for low earners. That comes on top of the new subsidy for first-time buyers with children. Earlier this month, the government tightened laws governing landlords and renovation, easing conditions for renters.

Politicians are also promising a tax bonus for investors, though many were unimpressed. GdW, a housing association, said limited incentives would further heat the market. GdW boss Axel Gedaschko said he would prefer lower incentives, but ones which are available without a time limit. Ideally, he’d like cheaper land and faster processing of applications, he told TV channel NTV.

None of this will come fast enough for the families, interns and expat newcomers, given the problems on the supply side. Companies are working at their limits, according to a construction industry association. The government set itself a goal of 375,000 new homes each year through 2021. This year, builders will only manage 300,000.

G SXX Housing shortage (004)

Allison Williams is deputy editor of Handelsblatt Global. To contact the author: williams@handelsblatt.com

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