The End of Cheap Housing in Berlin?
Dozens waiting to view an apartment in Kreuzberg...
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.
I guess this is becoming like Paris,where the rich overruns the Hoods of the acctually poors,and try to put all poor people outta the citycore,and press them into ghettos like Marzahn,and so on.In the future it will be like it`s in Paris`s center,where the rent for a appartment is so high,that no one(except the really rich)could spend this money for a little flat.So the poor peops are attempt to leave these places they used to live their hole life.I guess the State of germany was a student of Paris and is now try`n to become same,unfortunately.Germany is `boutta break into it`s pieces……..Lets just lean back and enjoy the protest marches in reachable future.
Interesting piece, and well researched — I just calculated the cost of my bobo chic-bare appartment in well-gentrified Kreuzeberg and it is exactly the average you give above! The agent must have calculated the price on the basis of the average. My upstairs neighbour, who is also in real estate while assuming an anti-gentrification posture outside work hours, claims that she warned the current owner, my landlord, that it was too expensive.
Btw: how did you take the picture at the top of the piece?
Btw2: why is Amsterdam not in the list?
I took the picture above during an apartment showing in Kreuzberg, near Hermannplatz. You can often see a crowd of people gathering in front of building’s doorway, and you know they are waiting for the arrival of the property agent. I’ve heard lots of talk recently that the numbers are so out of control that people who really want an apartment have come to offering the agencies a ‘commission’ should they be offered the apartment. I call this a bribe!
You are quite right that I missed Amsterdam in my list. The market in Amsterdam, if I’m correct, is a little deceptive as there is social housing (with years of waiting for them) at controlled prices alongside very expensive housing in the “free zone”. On top of that there is plenty of illegal renting of these rent-controlled apartments. I wonder how the average rent costs are determined.
Buying in Amsterdam, from browsing a few sites, seems to be 4437 EUR per square meter.
[...] even more in hip / sought-after locations like Prenzlauer Berg, Kreuzberg and Neukölln. As this timely post on the wonderful Needle In Berlin blog points out, “living in the scenester / arty areas of [...]
I don’t want to sound as though I’m disputing all of your numbers, but I still think that Berlin is a comparative bargain. That said, I’m kicking myself for not investing 2 years ago. My own observation is that prices have increased in my areas of interest by about 20% in that same time!
By the numbers you provide above, buying in Berlin in the new “cool” areas is still 700-1000 cheaper its rivals. You list Stockholm, for example, as cheaper than Berlin to buy, but your source only lists a price for Sweden as a whole. In my search I can see much, much higher average prices per meter in Stockholm. (See: http://www.stockholmnews.com/more.aspx?NID=6104)
Even more to the point, to get a fuller picture we would of course have to take into account the average cost of utilities and such. And as you say, it is still cheap to go out in Berlin than many other places. So the cost of a city depends on more than just housing.
One of the big issues I have with people who love “cheap” Berlin is the way that they expect the city to remain static. Often it seems that people are quite comfortable in wallowing in the city’s poverty. This aspect has always seemed perverse to me. As if getting control of the terrible unemployment in the city would be a bad thing.
Also I’m not sure about this “late 19th-century bourgeois architecture” in Prenzlauer Berg, but I’ll let that slide.
Dear Robert,
Thank you for the correction on Stockholm, you are quite right, I made a mistake here. Prices are more like 6000 EUR per m2 in the Swedish capital. I will correct above!
I’m not sure what you mean by “700-1000 cheaper its rivals”? My main point is that housing in Mitte, Kreuzberg and P Berg are rapidly coming into line with other European neighbourhoods that cater to ‘Bobo’ populations. This is a remarkable evolution from where housing prices once were (I recently met someone at a party abroad who wanted to know whether it was still possible to ‘fix up a building in Prenzlauer Berg’ on a small amount of money… of course, I set her straight!). I agree, as I mention in your article, there is much more to saving money in a city than the cost of real estate, but this article is focused on the question of cheap housing.
Finally, you are right that Prenzlauer Berg was not a bourgeois neighbourhood in the mid-late 19th C. / Gründerzeit, when the residential building spurt occurred. I meant that the apartments were taken over in the 90s by the children of bourgeois families, bringing a certain amount of that discreet charm (if you are susceptible to it) to the spaces. I will clarify above as well.
Thanks for your comment.
Best wishes,
Joseph