The End of Cheap Housing in Berlin?
Once upon a time, artists moved to Berlin because it was cheap. These days, they move to Berlin because they’ve heard it’s cheap.
Berlin has long been popular because of its low cost of living. It gives one more time to create, and less time working that ungrateful side job. But as housing prices rise, Berlin seems less of an exception among European capitals.
Ok, ok. But is housing still cheaper that elsewhere?
Let’s look at buying (rent prices generally follow) and the cost per square meter (say, for a 100m2 apartment):
- Vilnius: 1.207 EUR/m2 (December 2011)
- Warsaw: 2.112 EUR/m2 (May 2011)
- Berlin: 2.593 EUR/ m2 (December 2011)
- Brussels: 2.778 EUR/m2 (July 2011)**
- Lisbon: 2950 EUR/m2 (December 2011)
- Vienna: 3.366 EUR/m2 (July 2011)
- Madrid: 3.478 EUR/ m2 (December 2011)
- Rome: 6.171 EUR/m2
- Stockholm: over 6333 EUR/m2
- Paris: 7.948 EUR/m2 (December 2011)
- Greater London: 8.800 EUR/m2 (September 2011)**
At first glance, Berlin is on the cheaper end among European capitals for housing. But one does not necessarily want to live just anywhere in a big city’s metropolitan area. This is certainly the case in Berlin. When I first came to Berlin in the late 90s, I fell in love with Prenzlauer Berg. I was amazed by the rambling old-world apartments to be had for next to nothing (average ‘cold’ rents were 5.39 DM, or 2.76 EUR per m2, in 1991 in East Berlin, or 276 EUR for 100 m2) . They were plentiful, often newly renovated, with big balconies, hardwood floors, high ceilings… 90s wealth and bourgeois charm brought to late 19th-century architecture. Similar spaces were located in neighbourhoods experiencing cultural Renaissance, such as Mitte and Kreuzberg. In recent years, parts of Neukoelln and Friedrichshain have joined to constitute what plenty of arty hipster types, for better or for worse (because there are plenty of other lovely neighbourhoods, but not as arty), think of as Berlin.
Here are the prices to buy today in those neighbourhoods (from the December 2011 Immobilienpreisspiegel from the city). They were once some of Berlin’s cheapest ten years ago and are now in line, or slightly more expensive, with elsewhere in the city:
- Friedrichshain: 2.291 EUR/m2 (all December 2011)
- Kreuzberg: 2.750 EUR/m2
- Prenzlauer Berg: 2.860 EUR/m2
- Mitte: 3.485 EUR/m2
- Areas of Neukölln that have been gentrified are already going for 2.000 EUR/m2.
Rentals range between 10 EUR/m2 (for Kreuzberg and Prenzlauer Berg) and 15 EUR/m2 for parts of Mitte.
These prices are still cheapish for a European capital, but they are rising spectacularly. And, when one, for comparison’s sake, looks elsewhere in Europe, to the costs in similarly funky and central areas in other European cities, Berlin does not seem anomalous:
- Ixelles, in Brussels: 3.053 EUR/m2 (September 2011)
- El Raval, in Barcelona: 3.079 EUR/m2 (December 2011)
- Barrio Alto, in Lisbon: 3.500 EUR-4.100 EUR/ m2 (December 2011)
- Malasaña in Madrid: 3.823 EUR/m2 (December 2011)
- Canal St Martin (10th), in Paris: 6.874 EUR/m2 (December 2011)
- East London (Bethnal Green, Shoreditch): 6.200 EUR/m2 to 12.000 EUR/m2.
I just had a look at rents in central Madrid and they look on par with Prenzlauer Berg and Mitte.
So, where does that leave us?
Living in the scenester / arty areas of Berlin is now comparable in price to similar neighbourhoods of other European capitals apart from a few like Rome, Stockholm, Paris and London.
This will be a disappointment to plenty of ex-pats who moved to Berlin expecting it to be the bargain it once was. On top of it, buying in Berlin is now difficult and frustrating. Not only are there few old-world apartments left for sale (mostly because the grand majority of Berliners rent), but with the financial crisis many investors see Berlin real estate as a safe bet and they are increasing demand. Try sifting through what’s available on immobilienscout.de in Neukoelln, for example, and you will be surprised at how little you turn up. Those who have lived in Berlin a long time, and who remember what apartments used to cost, are perhaps kicking themselves by now. This memory might also prevent them from paying those higher prices today, although they might think twice about not doing so tomorrow. And try renting an apartment in this city, and you will face a huge amount of competition in neighbourhoods like Kreuzberg.
If you are after a funky neighbourhood, Lisbon, Barcelona are likely to cost you about the same as Berlin––if not this year, then certainly in a year or two’s time. We are certainly coming to the end of cheap housing in the German capital’s ‘cool areas’, unless the arts scene expands beyond those core neighbourhoods. This may well happen, as there’s plenty of room to grow. Cost of living is not simply one’s housing prices, and in much of Berlin going out and having a good time is still remarkably inexpensive. I also think there’s a great deal to be said for breaking out of cool, boutiqued, Berlin (which is increasingly expensive) and living in neighbourhoods that are less fashionable and more affordable. For the moment, Berlin continues to have a remarkable atmosphere of creation, on which you can put no price tag.
The best advice for someone coming to Berlin is to move because they love the city, not because they think of it as a ‘deal’.
**Note: London and Brussels are based on the following information: In Greater London, the average cost of an apartment is 440.000 EUR and in Greater Brussels, the average cost is 208.365 EUR. If this is a 50 m2 apartment in London, and a 75m2 apartment in Brussels, I have come up with rough calculations which do not seem that far off. The other cities are from published sources, follow the links.