Can't Afford Sydney And Melbourne Rent? Let's Do What Berlin Just Did
In Australia, the reality of paying more than half your weekly salary in rent, or having rent increases imposed midway through rental tenancies has become a normal part of life for many, particularly Millennials.
For Australia's more than 2.6 million renters, despite modest falls in the overall property market in the past 12 months, rents continued to increase nationally in the first quarter of 2019.
It is a trend reflected in many cities all over the world, as the wealth disparity between rich landowners and poorer renters continues to grow. But what can cities or local governments do about it?
Berlin City Council has recently hit upon a neat plan to try to stem the rising tide of gentrification that has seen the average rents in the German capital double in the past decade. It recently voted to freeze rents in Berlin for the next five years from January 2020 (with a retrospective clause intended to stop any opportunistic property owners from jacking up the prices in the meantime).
In a city where 85 percent of the population rent rather than own their own home -- and more than 40,000 people have moved to the city from elsewhere in the past decade -- many experts say Berlin is in the midst of an affordability housing crisis. In 2017 a staggering 20.5 percent average rent increase in Berlin was reported to be the biggest year-on-year rent increase anywhere in the world.
I recall when I first moved to Berlin in 2000 it lived up to the reputation former Mayor Klaus Wowereit once described it as : “poor, but sexy”. It was still recovering from the fall of the Berlin wall in November 1991 which gave way to empty city buildings being turned into semi-legal rave spaces, galleries and political art projects -- and it was possible to rent an entire small apartment for as little as €100 (A$160) a week.
But, as I have returned almost every year ever since for work and travel, eventually even Berlin began to visibly change. Waves of cashed-up tourists arrived from all over the world on budget airfares looking to relive that dream -- without really caring about its political or social underpinnings.
Local Berliners suddenly felt outnumbered by tourists in their own city -- and many were being priced out of their own homes by Airbnb and short stay entrepreneurs jacking up the property market. In short, the popularity of the city resulted in a rapid population growth and the city was unable to keep up with the demand.
But over the past few years Berliners have begun revolting -- staging affordable housing demonstrations all over the city brandishing signs with slogans like 'Homes for people not property for profit', including a large one last April in Alexanderplatz.
Now the Berlin City Council has listened by taking the relatively radical step of rent freezing. But not everyone is happy about it. Bloomberg has warned that “capping rents threatens to scare away investment, stalling anything from upgrading windows to constructing much-needed new apartments.”
But many Berliners would prefer to keep foreign investors out than have their city lose its more grungy, arty, community-oriented edge. Late in 2018, Berliners managed to fight off attempts by Google to set up a start-up campus worth €500 million (A$804.1 million) in the city's traditional progressive heart of Kreutzberg after it was vehemently opposed by local activists.
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Like major Australian cities and many other international cosmopolitan destinations, Berlin wants to avoid the fate of becoming a city where international super-rich investors simply park their money in cheap property (apartments in Berlin are still about a third of the price of those in London or Paris) and watch their investments grow while ordinary residents are priced out of the market.
In Australia, parts of our cities like Docklands in Melbourne are becoming what has been dubbed 'global capital reserve shelters' -- dominated by medium-density 'off-the-plan' investment property strips. A recent report found that more than 16 percent of Melbourne's apartments remain empty as investors simply wait for the market to improve to sell them off.
Meanwhile, the Anglicare 2019 Rental Affordability Snapshot found that the ability of low-income earners in Australia to find affordable housing is lower than ever -- finding that just 2.2 percent of rental properties on the market would be affordable to a single person on minimum wage.
That's why Berlin's rental price freeze would be a great step that I can only wish Australian political leaders would have the bravery and foresight to emulate -- rather than simply allowing the market to dictate housing prices, leaving many people forced out of the urban housing market or permanently living in housing stress.
Unfortunately, in a country like Australia where both major parties seem beholden to the ethos of neo-liberalism and free market economics at the expense of the housing rights of local people -- that wish seems like a distant dream in 2019.