Berlin’s Rent Crisis Fuels Political Extremes

The capital’s housing market has undergone a dramatic reversal since 2003, when the city rebranded itself as a "poor but sexy" hub for startups. While the post-Wall era was defined by an oversupply of empty units, the subsequent influx of residents—drawn by a booming tech sector and research institutions—has left the city unable to keep pace with demand. Today, renters face costs reaching €15.78 per square meter, excluding utilities, while Germany as a whole faces a total deficit of 1.4 million lower and middle-priced homes.

Kritikos, an economist at the German Institute for Economic Research, argues that the crisis is largely self-inflicted. He points to a bureaucratic landscape that makes construction sluggish and prohibitively expensive. When combined with rent-control regulations, these hurdles have discouraged investors, effectively stalling new developments. Meanwhile, political proposals to expropriate 220,000 flats from corporate landlords—backed by 58 percent of Berliners in a 2021 referendum—are dismissed by critics as a distraction. Such measures merely redistribute existing stock rather than addressing the fundamental lack of supply, potentially reviving the era of cronyism that once plagued public housing allocations.