Merkel powerless against rent-seeking: Do empty offices solve German housing shortage?
Rents are rising inexorably in major cities. Even buying a home in sought-after locations is becoming unaffordable for most. Too little new housing is being built. Things are getting tight. Even after the German government's housing summit, the issue remains a construction site. Can the Corona pandemic, of all things, bring a solution?
Anyone in Munich not more than 30 If you want to put percent of your income into an average apartment rent, you should earn more than 105,000 euros gross per year. In Frankfurt am Main and Stuttgart you can get an apartment here with an annual income of around 80,000 euros, in Heidelberg around 70,000 euros.
FOCUS Online had examined in January, how much money you must earn in each case, in order to rent an apartment of 68 square meters in a region and spend for the rent not more than 30 percent of your income. According to the Federal Statistical Office, singles currently live in an average of 68 square meters. For some dual-income couples, rent may not be a problem, and some will have to spend a higher proportion of their household income, but for most single earners, rent will remain unaffordable in Germany's major cities.
And the burden on tenants is increasing inexorably: German rental apartments are becoming more expensive every year. The prices for houses and apartments are rising most regions of Germany have been incessantly for years. As a result, buying an apartment is becoming more and more attractive. Those who buy instead of rent save an average of 48.5 percent across Germany, according to the results of a Study by the Institute of German Economics (IW) in Cologne. In other words: Owners pay almost 50 percent less than tenants for housing. In Cologne there are almost 60 Percent. In 90 percent of the 401 districts and independent cities examined by the IW, ownership beats rent.
And so the costs of owning a home are also rising due to the high demand for home ownership and low building interest rates. According to Calculations by the construction financier Interhyp rose The average purchase price of a property including additional costs rose from an average of 277,000 euros in 2010 to 434,000 euros in the first half of 2020 - an increase of 56.7 percent.
Conclusion: There is too little living space in Germany. The price spiral is spiraling ever higher.
Also read about this topic: High price differences depending on the region – this is how much house you can afford as an average earner in Germany
Social housing in retreat: too little housing for the poor
Construction Minister Horst Seehofer (CSU) sees However, the federal government is on the right track with its “housing offensive”. At a balance event in Berlin he assured , the self-imposed goal of 1.5 million new apartments will be achieved by the end of the electoral period. The remaining construction work is scheduled to begin later this year.
Seehofer: "Last year alone, 300,000 homes were built despite the Corona pandemic. That's the highest level in 20 years." He added, however, that the end of the road is not yet reached in addressing the housing shortage: "We still have a lot of work to do."
At the start of the “housing offensive” laid down in the coalition agreement almost two and a half years ago, Seehofer promised a total of 1.5 million new apartments. By the end of the year there will probably be 1.2 million. In addition, the Ministry of Construction expects around 770,000 building permits. The federal government spends a billion euros a year on social housing, emphasizes the Union's coalition partner, SPD. Housing benefits have been adjusted, building child benefits have been introduced and social housing has been built – “at a high level”.
For example, although more than 25,000 social housing units were built nationwide in 2019, at the same time nearly 65,000 units fell out of the social housing obligation. The bottom line is that there were fewer social housing units. For the IG Bau trade union, the offensive has therefore failed. "In terms of housing construction, the transfer is at risk for this federal government," said IG Bau head Robert Feiger. The rents went through the roof, while every twelve minutes a social housing disappears from the market. According to IG Bau, rents for simple apartments for Hartz IV recipients, for which the state bears the costs, have risen by 28 percent on average in Germany since 2015.
In the opinion of Katrin Göring-Eckardt, head of the Green Party parliamentary group, the housing policy of the grand coalition of CDU, CSU and SPD is also not bringing any progress: "The government's record is devastating: exploding rents, dwindling social housing, hardly any affordable property for families in conurbations, plus more vacancies and desolate town centers." According to Göring-Eckardt, the explosion of rents is one of the most pressing social problems in the country: "The federal government has not managed to alleviate the housing shortage in our cities, it has even exacerbated it." Furthermore, far too many social housing units were lost. "Horst Seehofer could have prevented this social robbery with a new law that permanently secures social housing."
The construction policy spokesman for the SPD parliamentary group in the Bundestag, Bernhard Daldrup, does not want to accept the accusations from the Greens on himself and the coalition: “The criticism and demands of the Greens in Berlin do not correspond to their actions in the states and municipalities. After all, the Greens He is involved in the government in eleven federal states and is also politically responsible in numerous municipalities.”
Solutions needed - not only for metropolitan areas
But political wrangling and playing the blame game doesn't help people. And when it comes to construction and housing, it's not just about the major metropolitan areas, but also about inner cities and village centers. There, apartments are often vacant, and sometimes houses are falling into disrepair. In order to make town and village centers more attractive, CSU Member of Parliament Emmi Zeulner, for example, proposes locating universities and university chairs in rural regions, making the protection of historical monuments flexible and increasing tax depreciation. Zeulner is the rapporteur for the CDU/CSU parliamentary group in the Building Committee: For Zeulner, locating universities in rural areas has several advantages: "Not only will existing university locations be relieved, but at the same time we will use this to provide targeted growth impulses in rural areas."
But to make rural areas more attractive, they also need more up-to-date infrastructure, such as broadband Internet, rail connections, more shopping facilities or hospitals and specialists - and of course jobs. As long as there is a shortage of the bare essentials in rural areas, people will continue to move to the cities.
And there, for example, the owners' association Haus und Grund and its president Kai Warnecke complain about a lack of management. There are too few incentives to build new homes and rental apartments. Landlords are burdened by regulations and laws, says Warnecke. It must be worthwhile to offer living space. According to the association, the return on investment for private landlords in Germany is between one and two percent: “The properties are bought by those who want to speculate with them,” says Warnecke: “They no longer have any connection to the German housing market.” He asks rhetorically: “Who should be your landlord in the future? The citizen next door or the fund on the Cayman Islands ?”
Home office creates space: Converting empty offices into apartments?
Possibly the Corona Pandemic could alleviate the housing shortage in cities. Because of the current trend towards home offices, there is a lot of empty office space in cities. 325,000 new apartments could be created in the next four years if the offices were converted into apartments. This is the result of two studies by the Eduard Pestel Institute from Hannover and the working group for contemporary building from Kiel. For comparison: In 2019, the number of completed apartments nationwide was 293,000.
The studies were commissioned by the "Social Housing" alliance of associations, which includes the German Tenants' Association, Caritas, the Construction, Agricultural and Environmental Workers' Union, the German Society for Masonry and Housing Construction as the umbrella organization of the masonry brick industry, and the German building materials trade. And they associate the figure with clear political demands. There must be a "strict social quota" for the additional apartments so that office buildings do not become luxury lofts. In addition, the state would have to set up a special program to promote the conversion.
But whether there are actually so many vacant office spaces that are no longer needed is debatable. The idea has charm, however, because it could help not only to alleviate the housing shortage but also to strengthen city centers. But the Institute of German Business (IW) recently found in a survey that only 6.4 percent of companies in Germany plan to reduce their office space. So so far, more home office does not mean that offices are already being freed up on a larger scale. And in sought-after metropolitan areas such as the Stuttgart region, there is more likely to be too little office space than too much. According to a study, the vacancy rate in the state capital was only two percent in the fall. And rents have not been depressed by the Corona pandemic, the real estate analysis company Bulwiengesa has determined on behalf of the city of Stuttgart and the Stuttgart Region Economic Development Corporation. In addition, retrofitting office space with kitchens and sanitary facilities is extremely costly.
Rent cap demanded for the whole of Germany
That leaves the controversial rent cap from Berlin. Could it be the panacea for German tenants' stretched wallets? According to an alliance of trade unions, tenants' associations and social welfare organizations, Germany has no other choice. They are calling for "Rent freeze! Because your home is at stake." If it were up to the alliance, rents should be frozen at their current level nationwide for six years.
Adolf Bauer, President of Sozialverband Deutschland (SoVD): "Although the development of rents affects everyone equally, it makes poor people in particular even poorer. Single parents, pensioners and people with a migration background are particularly disadvantaged, as are single households and recipients of transfer payments." Bauer wants more subsidies and stronger market regulation: "Only more public housing subsidies, more social housing construction and more prudent building land mobilization can prevent speculation and promote affordable housing."
But in Berlin – the pioneer when it comes to rent caps – freezing rents has led to bizarre conditions on the housing market. According to a Analysis by ImmoScout24 between September 2019 and September 2020, the asking rents for the apartments affected by the rent cap rose by five percent from an average of 12.91 to 12.26 euros per square meter. At the same time, however, the total supply of rental apartments in Berlin fell massively by 41.5 percent. The supply of existing rental apartments even fell by 59.1 percent.
A look at the other top cities in Germany shows that the drastic lack of supply in Berlin was not caused by the corona pandemic. Because in Hamburg, Düsseldorf, Frankfurt am Main, Cologne, Munich and Stuttgart had the residential property offer on ImmoScout24 in the same period, unlike in Berlin, increased significantly. In these top 6 cities, the total supply of rental apartments increased by 35.3 percent over the same period.
Landlords in Berlin are hesitant to relet because of the rent cap. Many prefer to sell their apartments. The Federal Constitutional Court wants to rule on the admissibility of the rent cap by June.
Vienna and Amsterdam can become models for major German cities
So the decades-long trend of moving to the outskirts of cities and commuting between home and work will probably continue for some time. But the resulting commuter flows are now leading to traffic collapse in many major German cities. In many places there is a lack of rail connections and the expansion of local public transport. This would be remedied by creating cheaper housing in cities. And so the cat bites itself back into your own cock.
Many urban planners therefore advocate the large-scale purchase of apartments by local authorities. This is the only way to prevent rent increases and real estate speculation in cities. As early as the 1920s and 1930s, Vienna promoted housing cooperatives and built tens of thousands of municipal apartments. And even today, there are 220,000 apartments owned by the city of Vienna. Vienna has thus removed a large part of its real estate supply from the speculative real estate market.
Architect and urban planner Steffen de Rudder of Bauhaus University Weimar: "60 percent of people live in Vienna in municipally subsidized housing. That's great. In Amsterdam, it's similar. The city owns large housing projects and can control more. In many German cities, that has been out of hand. But what also shows: The housing issue is mainly a matter of politics, less of urban development."
