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I’ve just been on a lightning-quick but highly informative visit to Berlin and the trip prompted two key thoughts about how different the German market is to Britain’s.
Firstly, as has often been written, most German residents rent and do not own their homes. In Berlin the situation is extreme, a result of the city being divided until 1990 and until then spending 30-plus years surrounded by East Germany; therefore only 15% of homes are owner-occupied. However, even after two decades of reunification and capitalism, the O-O total across the whole of Germany is still only 47%.
In recent years many have speculated about whether Germany will “be more like us” in the future but the owner-occupying trend does not seem that popular. As British owner occupation levels dip for the first time in over 30 years and young people are increasingly saddled with university debts – so will be unlikely to buy homes – so perhaps we will become “more like Germany” rather than the other way round.
The second big thought is how Germany has decentralised its wealth and industry, so has avoided one location dominating all others.
The car industry for example (still big business in Germany) is in Munich and Stuttgart; some administration remains in Bonn; media are in Cologne and Hamburg. Berlin is big and enlarging but is not the single area where wealth is concentrated.
Residential wealth reflects that. Look at these contrasting figures:
BERLIN (city population 3.275m)
Average prime resi rent: 11 euros/square metre
Average prime resi sale value: 3,500 euros/square metre
HAMBURG (1.69m)
Average prime resi rent: 13 euros/square metre
Average prime resi sale value: 5,200 euros/square metre
MUNICH (1.19m)
Average prime resi rent: 17 euros/square metre
Average prime resi sale value: 7,000 euros/square metre
COLOGNE (0.97m)
Average prime resi rent: 10 euros/square metre
Average prime resi sale value: 3,500 euros/square metre
FRANKFURT (0.65m)
Average prime resi rent: 15 euros/square metre
Average prime resi sale value: 4,900 euros/square metre
The capital, Berlin, is by no means most expensive for sales or lettings because demand, status and the importance of location are more decentralised. Contrast that with the UK where London dominates every other major city by some margin.
Is the German example good or bad? The answer depends, I suspect, on your viewpoint…and whether you are one of those benefiting from London’s current dominance of the UK market.
But whetever one’s opinion it is interesting to see successful ‘old’ western economies which have different housing models to ours, whether by intent or happenstance. With Britain starting a huge cultural change towards bricks and mortar, driven by a mix of mortgage restrictions and coalition cuts, that provides food for thought.
I was in Berlin to see a very swanky new scheme – YOO Berlin (being marketed in the UK by Cluttons Resorts, 020 7584 3050, www.cluttonresorts.com). Even at the very top end, with prices going from £250,000 to over £2.5m, most early buyers are investors, including some from the UK.
So paying millions for a property doesn’t mean it is going to be owner-occupied: that’s an interesting thought as Britain embarks on a period of housing change.
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