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BONUS: The Housing Market Where Renters Can Make a Fortune · Merryn Talks Money

0:04
Speaker 1: Welcome to Maren Talks Money, the podcast in which people
0:07
Speaker 1: who know the markets explain the markets. I'm mere in
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Speaker 1: Somerset Web Now this week we are bringing you a
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Speaker 1: bonus episode. You're getting quite a lot of bonuses at
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Speaker 1: the moment. I hope you're grateful. This is going to
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Speaker 1: be on our favorite topic, housing but not UK housing.
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Speaker 1: Our bonus episodes and this is not going to be
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Speaker 1: the last one are going to be on the matter
0:30
Speaker 1: of housing markets around the world? Are they as crazy
0:32
Speaker 1: as ours? Do people in other countries care about house
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Speaker 1: prices quite as much as we do? I suspect they
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Speaker 1: probably do, maybe in different ways. We're about found out
0:40
Speaker 1: now with me today as John Steppeck, senior reporter and
0:44
Speaker 1: my usual companion on this podcast, all there today he's
0:46
Speaker 1: saying the whole way through and that's why we call
0:48
Speaker 1: it a bonus. John, This series was almost entirely your idea.
0:53
Speaker 1: Tell me what are we going to do?
0:55
Speaker 2: I think that's quite jenerous, But yeah, no, I just
0:59
Speaker 2: thought case of cys with house prices, and often all
1:03
Speaker 2: we do is look at our own back gardens and
1:06
Speaker 2: start thinking that we have unique in lots of weird
1:08
Speaker 2: kind of ways. And actually no, house prices have gone
1:11
Speaker 2: up a lot all around the world, and it would
1:14
Speaker 2: just thought it'd be interesting to talk to some of
1:15
Speaker 2: our colleagues in different Bloomberg offices around the world, seeing
1:18
Speaker 2: as one now here at Bloomberg and it's got a
1:20
Speaker 2: massive reach, and just find out what the markets like
1:23
Speaker 2: in their countries and if there's any weird things about
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Speaker 2: their markets and how mortgages work, how property taxes work,
1:31
Speaker 2: and if there's that, and we can learn.
1:34
Speaker 1: Crack one promise from you before we move forward with
1:36
Speaker 1: a series of BOUNDUS episodes. Yes, you are not going
1:38
Speaker 1: to tell me that the NHS is not unique. I'll
1:42
Speaker 1: stop making me do a series on health systems around
1:44
Speaker 1: the world. Not doing it, I mean, now you mention
1:47
Speaker 1: it now, I'm just not happening happening this week the world.
1:55
Speaker 3: And this week.
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Speaker 2: Note this week we've going to Germany because actually Germany
1:58
Speaker 2: is a really interesting housing market, so it's really very
2:00
Speaker 2: different tales and lots of ways I think we're about
2:03
Speaker 2: to find out, and very very kindly, Benny Cammell, editor
2:08
Speaker 2: at Bloomberg, and Oliver Kruk, a TV correspondent over in
2:12
Speaker 2: the Berdlin office, have agreed to join us today for
2:15
Speaker 2: a nice chat about their experiences with the German property Marter.
2:19
Speaker 1: Thank you, Benny, thank you all of us. So what
2:20
Speaker 1: can you tell us about the German health system? John,
2:24
Speaker 1: you get the first question.
2:26
Speaker 2: Well, maybe it's a good idea if you introduced yourself
2:29
Speaker 2: so that readers actually can our listeners are can actually
2:32
Speaker 2: hear your voices and though who's who.
2:35
Speaker 3: Well, I'm Oliver Krook and I'm the sort of new
2:37
Speaker 3: beat of Berlin. I've been here for about nine or
2:40
Speaker 3: ten months, I can after eight years in London and
2:42
Speaker 3: before that New York, as you can probably hear.
2:44
Speaker 4: Oh, I'm Benedy Camel. I am also based in Berlin,
2:47
Speaker 4: where I have lived for scarely twenty two years, long
2:52
Speaker 4: as I've lived anywhere in my life. And I stepped
2:56
Speaker 4: onto the property ladder twelve years ago.
2:58
Speaker 2: So just you can maybe it give us a better back.
3:02
Speaker 2: I believe that you are display the accent, you're German yourself,
3:07
Speaker 2: and you can have understanding can the market because one
3:10
Speaker 2: of the things I think interesting with German property is
3:12
Speaker 2: that it kind of sat out the two thousands boom,
3:14
Speaker 2: but it appears to have you know, Resen with every
3:17
Speaker 2: other kind of market in the last decade. So what's
3:20
Speaker 2: the kind of detail of that.
3:22
Speaker 4: Well, you're right, that property until about ten years ago.
3:26
Speaker 4: And I just said that I bought properly about ten
3:29
Speaker 4: years ago. And I liked to joke that I bought
3:30
Speaker 4: the last affordable house in Berlin, because, as you say,
3:34
Speaker 4: prices have really gone through the roof since. And part
3:37
Speaker 4: of that reason might be unique to Berlin. You know,
3:39
Speaker 4: Berlin has long been the sort of ireland within Germany
3:44
Speaker 4: and has sort of followed its own rules and historically
3:47
Speaker 4: didn't have a lot of industry, didn't have a lot
3:48
Speaker 4: of big companies, didn't have a lot of finance, you
3:51
Speaker 4: know that the types of jobs that attract business and
3:53
Speaker 4: tracked money. So it was always relatively cheap to buy here.
3:57
Speaker 4: So when I moved here twenty years ago, so it
4:00
Speaker 4: was very cheap to rent. My first flat cost five
4:04
Speaker 4: hundred marks if you divide that by two, so about
4:06
Speaker 4: two hundred and fifty euros a month. You know, most
4:09
Speaker 4: people wouldn't probably get their utility bills.
4:12
Speaker 3: Sort you've left out the square footage on that, and
4:14
Speaker 3: it was a.
4:14
Speaker 4: Big place, it was eighty square meters. I moved in,
4:17
Speaker 4: loved it. My then girlfriend now wife moved in with me,
4:21
Speaker 4: loved it slightly less, but you know, we lived there
4:24
Speaker 4: for two years. But what I'm saying is it was
4:26
Speaker 4: cheap and there wasn't a lot of competition. But that
4:30
Speaker 4: has changed fundamentally, least in the last five six years.
4:34
Speaker 4: Berlin has caught up. It's not where Munich is, it's
4:37
Speaker 4: not where Hamburg is, it's not where distled Off is.
4:40
Speaker 4: Those are still more expensive. But the days of cheap,
4:45
Speaker 4: you know, fun housing in Berlin, you sort of move
4:47
Speaker 4: from one place of the next and upgrade as you
4:49
Speaker 4: go along. Those as Oliver will be able to tell you,
4:52
Speaker 4: are well and truly over.
4:54
Speaker 1: But Benny, how come you bought? We're always told that
4:56
Speaker 1: Germany as a nation of renters in Berlin, particularly as
4:59
Speaker 1: a rented paradise, what means it is?
5:01
Speaker 4: Yeah, so I think it's about fifty percent renters in
5:04
Speaker 4: Germany overall. I don't know what the number in Berlin is.
5:06
Speaker 4: By imagine imagine it even eight, okay, even higher. Why
5:11
Speaker 4: did I buy? That's sort of you know, why do
5:14
Speaker 4: you do things? Well? There comes a point when you
5:15
Speaker 4: get old and boring and you think I need to
5:17
Speaker 4: need to buy a lawn mower. I need to buy
5:19
Speaker 4: a Volvo. I need to buy a house. Yeah. So
5:22
Speaker 4: it came to that point. I had the lawnmower and
5:24
Speaker 4: the Volvo, and and then the house came next. And
5:28
Speaker 4: before the house, I've got a plan ahead. Yeah. So
5:33
Speaker 4: and that was as I said, I don't get a
5:37
Speaker 4: lot of things right in life, but that seemed like
5:39
Speaker 4: one of the things, at least on timing I got right.
5:41
Speaker 1: Yeah.
5:42
Speaker 4: So we we we we saw the market, we looked ahead,
5:45
Speaker 4: and we thought it's probably never going to get much
5:47
Speaker 4: cheaper than it is now. And that's why we did it.
5:51
Speaker 4: And you know, I have to say and look back.
5:54
Speaker 1: This was around the same time that John and I
5:56
Speaker 1: were recommending that readers in the k board German property
6:00
Speaker 1: funds Berlin residential property funds. That didn't work out that well,
6:04
Speaker 1: did it.
6:04
Speaker 2: We were a bit early, very early, And also I
6:07
Speaker 2: think there was some complications with the Obviously these are
6:11
Speaker 2: big coninstitutional things that can own lots of rental properties.
6:14
Speaker 2: But I mean, because I'd assume all of that's the
6:17
Speaker 2: situation that you're and are you renting?
6:21
Speaker 3: Yes, I am renting, and in and in three and
6:24
Speaker 3: in what the nine months I've been here, I've lived
6:26
Speaker 3: in three different places, so it's been something of an odyssey.
6:29
Speaker 3: The first admittedly was Bloomberg kind of put me up.
6:32
Speaker 3: Then the second I was a sublet off of somebody else,
6:35
Speaker 3: which is fairly common here and in fact, people do
6:39
Speaker 3: not want to relinquish their name on a contract, so
6:42
Speaker 3: people will sublet. People will swap apartments constantly in order
6:45
Speaker 3: to not give that give that up. And I moved
6:48
Speaker 3: in there and it was just sort of had some
6:50
Speaker 3: serious issues. And then I finally found a place. I
6:53
Speaker 3: got quite lucky to find another place, because when I
6:55
Speaker 3: was looking at apartments there were people queuing up outside.
6:58
Speaker 3: You know, it was just people just moving in and
7:01
Speaker 3: just trying to get their names down and just to
7:02
Speaker 3: move apartments. Because there's very very little housing in Berlin
7:05
Speaker 3: right now. Is subletting legal, So it is legal, and
7:10
Speaker 3: in fact, you have, I think, from what I understand,
7:12
Speaker 3: a lot more flexibility with what you can do. You're
7:14
Speaker 3: not subject to a lot of the other issues that
7:17
Speaker 3: you have in terms of rental increases and things like that.
7:19
Speaker 3: And if it's furnished as well, there are a whole
7:21
Speaker 3: slew of things that you can do. And again this
7:24
Speaker 3: is not to sort of ranch too excessively on this,
7:27
Speaker 3: but it's what seemed to me to be the case.
7:29
Speaker 3: Was this the person who was on this rent, who
7:30
Speaker 3: probably paid you know, a fraction of what he was
7:33
Speaker 3: sending it out for, was basically subletting it to you know,
7:36
Speaker 3: people who have moved here for a job or something
7:38
Speaker 3: like that, and he himself had gone off to sort
7:40
Speaker 3: of Ecuador or something, and I have to imagine he
7:43
Speaker 3: was sort of trading the margin there and the kind
7:45
Speaker 3: of massive markup that he was he was getting with
7:47
Speaker 3: the apartment.
7:47
Speaker 1: Yeah, that's what I was going to ask if this
7:49
Speaker 1: is absolutely extraordinary. You can live in a rent controlled
7:52
Speaker 1: apartment on a long lease that you do not give up,
7:56
Speaker 1: and you can then sublet legally that apartment out out
7:59
Speaker 1: of different price and hate the spread yourself, leaving the
8:04
Speaker 1: landlord entirely out of the equation.
8:07
Speaker 5: Why.
8:07
Speaker 3: I don't know all of the ins and outs of
8:09
Speaker 3: it legally, but that is certainly what I am what
8:11
Speaker 3: everyone does. Yeah, and not only that, I mean you
8:14
Speaker 3: can also bring you know, suits against landlords. I think
8:16
Speaker 3: that a lot of the time they don't expect you to.
8:19
Speaker 3: I mean a lot. I mean, it's not a lot
8:21
Speaker 3: of people do sue their landlords in Germany, and I
8:23
Speaker 3: think that that is a fairy dangerous dynamic to establish.
8:27
Speaker 3: You have to think of the sort of creative retributions
8:29
Speaker 3: that you can get. But if there's one, you know,
8:32
Speaker 3: there's this service called Khani that has sort of represents,
8:36
Speaker 3: you know, people who are renting properties and you can
8:39
Speaker 3: and they have a sort of ninety i think ninety
8:42
Speaker 3: eight percent success rate of getting the rent reduced if
8:44
Speaker 3: you sue you your landlord, because apparently people are overcharging
8:48
Speaker 3: from the index. But again, you know, you open yourself
8:50
Speaker 3: up to some kind of creative issues.
8:53
Speaker 1: But if you're a sub letter, presumably you can be
8:55
Speaker 1: chucked out at any time. Or if you're a sub letter,
8:57
Speaker 1: do you have the same rights as an original tenant, No,
9:00
Speaker 1: you don't.
9:00
Speaker 3: Well, it also depends on whether or not the apartment
9:03
Speaker 3: is furnished. So a lot of people will now furnish
9:05
Speaker 3: the apartment, which means that they basically you can do
9:07
Speaker 3: just a twelve month contract and you can't kick people out.
9:10
Speaker 3: So that's what that's the sort of workaround that some
9:12
Speaker 3: people that some people have found.
9:14
Speaker 2: That's really fascinating because like from from here, like the
9:18
Speaker 2: perception is that Germany's kaing or the renter's paradise in
9:22
Speaker 2: terms of you get, you know, long contracts that are
9:25
Speaker 2: very hard to break, but effectively, it sounds to me
9:28
Speaker 2: a little bit like what's then happening is that the
9:31
Speaker 2: original the little renter is then just sub letting and
9:35
Speaker 2: then all you're getting there is a similar kind of
9:37
Speaker 2: market to the rest of Europe, where there's a lot
9:40
Speaker 2: of tendis coming and going and not necessarily having many
9:44
Speaker 2: more rights than they both have in another country.
9:46
Speaker 1: Take on the freehold liso system.
9:48
Speaker 2: Yeah, yeah, Actually I don't get that's learned something.
9:53
Speaker 4: Yea, when they did try at some point to regulate
9:55
Speaker 4: the market more by putting in a cap price cap
9:58
Speaker 4: and so you can you can charge X on this
10:00
Speaker 4: flat on no more. That happened a couple of years
10:04
Speaker 4: ago and has since disappeared. It was a bullin project,
10:07
Speaker 4: and like many sort of bullin experiments, it didn't really
10:09
Speaker 4: work out. So we're sort of back into more of
10:12
Speaker 4: wild west market now that Oliver is experiencing.
10:15
Speaker 1: Interesting and Oliver, does it make you feel a little
10:18
Speaker 1: low status to be renting?
10:21
Speaker 3: I mean I also have a sort of guiding philosophy
10:24
Speaker 3: in life, which is sort of admin diminishing right. And
10:28
Speaker 3: so owning property in a place where I don't really
10:30
Speaker 3: speak the language fluently, and that language is German, you know,
10:34
Speaker 3: that's I think there's some positives to that. But I mean,
10:38
Speaker 3: you know, it does feel, you know, my entire career,
10:41
Speaker 3: I've rented, and it does feel, you know, to a
10:43
Speaker 3: degree that you're just sort of, you know, flushing money
10:45
Speaker 3: down there, you know, buying equity every month, right, which
10:47
Speaker 3: would be something that'd be quite nice to do. Maybe
10:49
Speaker 3: now is the moment with a higher interest rates so
10:51
Speaker 3: you can put a deposit down. Maybe there's a moment
10:53
Speaker 3: to swoop into the Berlin housing market.
10:56
Speaker 1: Interesting, Now I suppose my question maybe I'm better to
10:58
Speaker 1: direct it to Benny. In Germany? Is there a sense
11:02
Speaker 1: that owning is better like there is in the UK?
11:04
Speaker 1: Everyone wants to earn that's the goal. Everyone's taking whatever
11:08
Speaker 1: route they can to somehow or another raise that deposit,
11:12
Speaker 1: get that mortgage rate, they can afford, own that house.
11:14
Speaker 1: It's the be all and end all. And we like
11:17
Speaker 1: to thank John and I that there isn't that sense
11:20
Speaker 1: of life is only complete, or life is even only
11:23
Speaker 1: beginning once you've got your foot on the property ladder.
11:25
Speaker 1: Everything else is just a run up to that great
11:28
Speaker 1: moment of being owned by a bank.
11:31
Speaker 4: I think it depends a bit who you're rather what
11:33
Speaker 4: generation of people you're talking to. If you're talking to
11:35
Speaker 4: people like my parents, absolutely yes, you know that was
11:38
Speaker 4: the be all, end all of their life, and not
11:40
Speaker 4: just buying. It was building.
11:42
Speaker 5: You know.
11:42
Speaker 4: My parents built a house from scratch, moved in and
11:47
Speaker 4: lived in there until their last breath, and that was
11:50
Speaker 4: sort of the model of she we say anywhere between
11:52
Speaker 4: the fifties and the eighties, I remember talking to my
11:55
Speaker 4: grandma about sort of her serf asing her mortgage. She
11:58
Speaker 4: would say, whenever I had a penny, I would go
12:00
Speaker 4: to the bank and put it down towards my mortgage.
12:02
Speaker 4: And that was her life.
12:03
Speaker 5: You know.
12:04
Speaker 4: These people lived for their houses, and that I think
12:08
Speaker 4: has changed you. If you talk to people today, they
12:10
Speaker 4: have other plans in life. They want to be more flexible,
12:13
Speaker 4: they want to move around. They don't want to have
12:15
Speaker 4: the millstone of a mortgage around their neck. They might
12:17
Speaker 4: not even have the money to be part of that
12:20
Speaker 4: whole race to begin with, and that's a whole different problem.
12:23
Speaker 1: You know, Well that's a sig. Part of the question,
12:25
Speaker 1: isn't it. Do attitudes change because property becomes unaffordable?
12:29
Speaker 4: Yeah? Absolutely. And the thing you know that makes Germany
12:33
Speaker 4: maybe slightly harder to access is that you need a
12:36
Speaker 4: sizable down payment. You can't like some other markets, come
12:39
Speaker 4: in and say, you know, I'd love to buy this place,
12:42
Speaker 4: you have to come in anywhere between ten is probably
12:45
Speaker 4: the ten percent is probably the absolute minimum, But most
12:47
Speaker 4: people come in with twenty thirty forty percent down payment
12:51
Speaker 4: on towards sort of the price of the property. So
12:54
Speaker 4: if you're buying a place for five hundred thousand, you
12:57
Speaker 4: want to come in with one hundred and fifty two
12:59
Speaker 4: hundred thousand in cash, and frankly some people have that money.
13:03
Speaker 4: A lot of people don't.
13:05
Speaker 2: And what is the mortgage market like there? Because obviously
13:08
Speaker 2: here in the UK, like a ten year effects would
13:12
Speaker 2: be about the longest anyone would ever go for, and
13:14
Speaker 2: a five year fix, which it's still considered fairly conservative.
13:18
Speaker 2: How does the mortgage market work there?
13:21
Speaker 4: Oh, it's much longer here, so nobody would do five years.
13:24
Speaker 4: Ten is the absolute minimum, fifteen, twenty thirty this is
13:27
Speaker 4: what you're looking at. These people who buy now, somewhere
13:31
Speaker 4: in their mind then know they're going to be broke
13:32
Speaker 4: for the rest of their lives, but they have an
13:35
Speaker 4: asset that sort of underlying that. I mean, my mortgage,
13:38
Speaker 4: for instance, was fifteen years and you can refinance after ten.
13:42
Speaker 4: But that is standard. Nobody does less than that, and
13:46
Speaker 4: they try and lock in these these long term rates.
13:48
Speaker 2: And what sort of rates do you get at that,
13:51
Speaker 2: because I know what the Eurozone rate is about. Well,
13:53
Speaker 2: the gentleman bound yield is just under three percent of
13:56
Speaker 2: the moment, So it's the kind of mortgage rates.
13:58
Speaker 4: Yeah, it's about you know, when when I bought, I
14:02
Speaker 4: had about three percent, and then when I refinanced, I
14:05
Speaker 4: was lucky in that it was you know, rates had
14:07
Speaker 4: come down so dramatically. Anyone going into it now will
14:10
Speaker 4: be looking at more like three four five percent, even
14:14
Speaker 4: maybe not five, but you know, three to four percent.
14:15
Speaker 4: And again it all depends on how much money you
14:17
Speaker 4: bring into this. Yeah, if you have a lot of
14:19
Speaker 4: you have a big down payment, you get a better rate.
14:21
Speaker 4: If you have the next nothing, you're gonna have a
14:25
Speaker 4: less preferable rate. So a lot of that depends on
14:28
Speaker 4: what kind of financial engineering you can do. But the
14:32
Speaker 4: other thing is in Germany you have to service not
14:35
Speaker 4: just that you know, not just that the interest, you
14:39
Speaker 4: have to service the principle, you actually have to pay
14:41
Speaker 4: down the debt, you know. I know. There are other
14:44
Speaker 4: markets like Scandinavia, like the Netherlands, where you're essentially just
14:48
Speaker 4: paying the interest on your mortgage and you rent from
14:51
Speaker 4: the bank essentially and hope that at some point your
14:53
Speaker 4: property will have become, you know, attractive enough that you
14:57
Speaker 4: can sell it again. Here you actually have to pay
14:59
Speaker 4: down it can become fairly expensive.
15:02
Speaker 1: So is there and when in the UK we really
15:05
Speaker 1: only use interest only mortgages for the for BITI let
15:09
Speaker 1: for buying a proper d and then renting it out,
15:10
Speaker 1: and the banks are much more open to interest only
15:13
Speaker 1: mortgages when you do that. Is there a by toilet
15:15
Speaker 1: industry in Germany?
15:16
Speaker 4: There is? And there isn't.
15:17
Speaker 2: I mean there is.
15:17
Speaker 4: There is a certain restriction in that you can buy
15:22
Speaker 4: a place, but you can't sell it within ten years
15:24
Speaker 4: unless you live in it. I mean you can, but
15:26
Speaker 4: whatever profit you made off it, you have you get taxed,
15:29
Speaker 4: and quite heavily. And the idea behind that is that
15:32
Speaker 4: you don't quickly flip something. They're trying to prevent overheating
15:36
Speaker 4: of a market whereby you buy something, you hold it
15:39
Speaker 4: for a couple of years, rented out to Oliver and
15:43
Speaker 4: then Lucky and you fleece Oliver and then you move
15:47
Speaker 4: on to the next thing, and then you know, five
15:49
Speaker 4: years on you flip it at a tidy profit and
15:51
Speaker 4: move on to the next thing. So Germany has put
15:53
Speaker 4: in some circuit breakers on that to prevent.
15:56
Speaker 1: But if you live in it, Benny, if you live
15:58
Speaker 1: in it, if I and.
15:59
Speaker 4: You flip it up three yeah. But again, the financing
16:03
Speaker 4: costs for a for a house or any any property
16:06
Speaker 4: in Germany on fairly substantial. You have, you have income tax,
16:10
Speaker 4: you have the property tax, which in Berlin is six percent.
16:15
Speaker 4: Arear no no, no.
16:17
Speaker 1: No equivalent of a stamp duty, which which we.
16:20
Speaker 4: Have to correct. So again, let's imagine you're buying a
16:23
Speaker 4: place for five hundred thousand and so seven percent on
16:27
Speaker 4: top of that is a six percent on top of
16:30
Speaker 4: that is your your your tax. There's the real estate
16:34
Speaker 4: agent that you need to pay, which is most annoying
16:38
Speaker 4: part of it all, which again can be six or
16:40
Speaker 4: seven percent and the legal fees.
16:43
Speaker 2: I know it's never been a complete a bit.
16:48
Speaker 4: I know it's a lot of money, it really is.
16:53
Speaker 4: And you see these guys show up on their Porsche
16:54
Speaker 4: and open the door and there you go.
16:56
Speaker 1: Here's why is that not computed down? Why is that
16:59
Speaker 1: not come a little easier?
17:02
Speaker 4: But you know, this is Germany with their are rules
17:05
Speaker 4: and it has become a little easier to share it.
17:07
Speaker 4: But you are talking about maybe conservatively ten percent on
17:13
Speaker 4: top of the purchase price that you have to somehow
17:15
Speaker 4: cough up in pure finance and costs, and we're shut.
17:20
Speaker 4: That is money that you have to make before you
17:23
Speaker 4: sell again. And you know the next time you'll have
17:25
Speaker 4: to make that money again. So which again is maybe
17:30
Speaker 4: prevents people a little bit from sort of flipping a
17:32
Speaker 4: property quickly.
17:33
Speaker 1: Yeah, so guys, anyone who would a year ago is
17:37
Speaker 1: now effectively down twenty percent sold today in a lot
17:41
Speaker 1: of trouble pressors of fallen around ten percent over hows
17:44
Speaker 1: that making a room feel wells.
17:48
Speaker 2: Because I mean because because places annoyed that host places
17:52
Speaker 2: are a little bit hard that they can have feiind
17:54
Speaker 2: in Germany. But the latest official start SAT is doing
17:57
Speaker 2: a bit twenty percent on the quarter, and that's.
18:00
Speaker 1: The most in years, right, that is benevolence on that second,
18:05
Speaker 1: But is.
18:06
Speaker 2: That affect you So people are thinking about of the market.
18:08
Speaker 4: There is more property available now because you know, while
18:13
Speaker 4: prices have come down, what has gone up our property
18:16
Speaker 4: are sort of utility bills for instance, and you know
18:20
Speaker 4: mortgage payments have gone up. So on the one hand,
18:23
Speaker 4: you know people live in houses, they might end up
18:26
Speaker 4: being being underwater with some of their property. So you're
18:28
Speaker 4: seeing more of these come back onto the market. But
18:32
Speaker 4: you have the slightly unappetizing mix now of high property
18:37
Speaker 4: prices and high interest rates, and that's that's pretty.
18:40
Speaker 3: Toxic and also a housing shortage somehow, you know. So
18:43
Speaker 3: this is the sort of odd thing or as you
18:44
Speaker 3: have everybody that's you know, we get we think we
18:47
Speaker 3: just had data out from the month of August where
18:49
Speaker 3: you had a record number since the data goes back
18:52
Speaker 3: of companies reporting job cancelations, so developers and they basically
18:57
Speaker 3: it was a twenty percent of the companies had required
19:00
Speaker 3: higher since nineteen ninety one when they started doing this.
19:02
Speaker 3: So you have this sort of strange situation where yes,
19:04
Speaker 3: you have a housing shortage, but because of all the
19:06
Speaker 3: other kind of impacts, you don't necessarily have the incentives
19:09
Speaker 3: there to come in and fill it, and so you know,
19:12
Speaker 3: it's that doesn't bode particularly well for people.
19:15
Speaker 4: And there are really no you mentioned this in your intro.
19:17
Speaker 4: There aren't really any real tax incentives to owning a
19:21
Speaker 4: place in Germany. You don't get any tax breaks. If
19:24
Speaker 4: you renovate, you might get some breaks, but it's nothing substantial.
19:28
Speaker 4: So owning a place at least, you know, in terms
19:32
Speaker 4: of taxes, doesn't really help you.
19:34
Speaker 1: But there there is a capital gains tax exemption for
19:39
Speaker 1: your own home as long as you live in it
19:41
Speaker 1: for a reasonable amount of time.
19:43
Speaker 4: There might be if there is, I'm not aware of it.
19:47
Speaker 3: When you sail in the coupon, you go into the maturity.
19:51
Speaker 2: When you sail the househoe would you have to pay
19:54
Speaker 2: capital gains tax on the plofits because.
19:57
Speaker 4: For long time and I live myself so so then
20:01
Speaker 4: you're okay. So if I bought a flat, rented it
20:03
Speaker 4: out to Oliver, sold it on five years.
20:06
Speaker 1: Oliver, I am sorry about this.
20:09
Speaker 5: I'm sorry, and then I would Yeah, So if my
20:15
Speaker 5: five hundred thousand property jumped to a million, I couldn't
20:18
Speaker 5: easily pocket the five hundred.
20:21
Speaker 1: They're a culture of owning second homes, holiday homes, beach houses,
20:25
Speaker 1: forest houses. Is this a thing.
20:29
Speaker 3: I can comme in on one aspect that I found
20:31
Speaker 3: pretty strange moving to Germany, which is the phenomenon of
20:34
Speaker 3: the Klein garden. Yes, which I don't know if you
20:37
Speaker 3: guys are familiar with this sort of it's this sort
20:39
Speaker 3: of little like plot of land, like tiny like that
20:43
Speaker 3: you may not even have a building on, but it's
20:45
Speaker 3: just kind of within the environment. Yeah, it's like a
20:47
Speaker 3: shack within the kind of environment, yeah, of Berlin, and
20:51
Speaker 3: you just go there in garden and it's just it's
20:54
Speaker 3: just a little space. It's you know, it's maybe what
20:56
Speaker 3: like like about the size of this booth right, it's
20:59
Speaker 3: a couple meters you know, in every direction. I mean,
21:02
Speaker 3: this is a big pastime for for the Germans.
21:04
Speaker 4: Some of these have been around for a long time,
21:06
Speaker 4: more than a century. And the idea is particularly in
21:08
Speaker 4: like inner city areas like Berlin, or in like the
21:11
Speaker 4: rural area, like the industrial heartland for people who lived
21:14
Speaker 4: in flats in you know, inner city locations and still
21:19
Speaker 4: wanted the benefit of you know, having a little plot
21:21
Speaker 4: of land and said lawnmower, and.
21:24
Speaker 1: That's why you had the lawnmower before you bought house.
21:30
Speaker 4: And then you could and then you could own that
21:32
Speaker 4: little plot of land and you know, set up your barbecue,
21:35
Speaker 4: put up your feet. That kind of thing houses a
21:39
Speaker 4: certain type of person.
21:40
Speaker 1: Who certain type of person, and you know, we have
21:45
Speaker 1: allotments here are very similar to.
21:49
Speaker 3: That as normal in the UK, because I never really
21:51
Speaker 3: had experience was pretty normal.
21:53
Speaker 1: I mean not for people who have gardens, but for
21:56
Speaker 1: non people without gardens will very often sign up to
22:00
Speaker 1: a lotment, very long waiting list for all the allotments
22:02
Speaker 1: in the UK.
22:05
Speaker 3: Yet a little bit just in preparation for this, to
22:10
Speaker 3: discover how much of this how much of this land
22:12
Speaker 3: in Berlin is actually a lot mens? And I found
22:14
Speaker 3: that apparently it's two thousand, nine hundred hectares within Berlin,
22:18
Speaker 3: so it's three point two five percent of Berlin. And
22:21
Speaker 3: to convert that into real speak, that's that's eight point
22:25
Speaker 3: three central parks or eleven point five high parks.
22:31
Speaker 2: Yeah, but how many football pitches?
22:33
Speaker 1: How many whales?
22:34
Speaker 2: Many whales?
22:37
Speaker 4: Yeah, So it used to be, it used to be
22:39
Speaker 4: a place where your you're you know, your uncle and
22:41
Speaker 4: your granny would would be on the weekends and you'd
22:44
Speaker 4: go out there and eat black forest gato, that kind
22:46
Speaker 4: of thing. But and now, you know, the Berlin hipster
22:50
Speaker 4: and and clubbing crowd have sort of rediscovered this, like hey,
22:53
Speaker 4: let's let's make this cool, you know, And so we've
22:56
Speaker 4: come full circle. And now it's like the young crowd
22:59
Speaker 4: who owning the places and anything they vowed that they'd
23:02
Speaker 4: never be. Suddenly they've become the small holes.
23:06
Speaker 1: Do either who have one the colony? You're kind of hypsters?
23:10
Speaker 4: Do you have colonies? At least not sizable ones? But
23:13
Speaker 4: these are our colonies.
23:15
Speaker 1: He's avoiding the question, do either of you have one
23:18
Speaker 1: of these hipster allotments?
23:20
Speaker 4: No, we are hipsters. But I have a small garden,
23:23
Speaker 4: that's the real thing.
23:24
Speaker 3: Yeah he's behind it.
23:25
Speaker 1: Yeah, he's grown too big for it.
23:29
Speaker 3: The only thing. The only thing that I also that
23:31
Speaker 3: maybe bears mentioning, that I thought was very weird about
23:33
Speaker 3: about Germany is that rental apartments don't come with kitchens.
23:39
Speaker 4: Always they come with a stove. The only requirement is
23:41
Speaker 4: you have to have a stove, a stove kitchen, but
23:44
Speaker 4: nothing else. And if there's a kitchen in that al
23:46
Speaker 4: around with your kitchen, even the shittiest kitchen, they can
23:50
Speaker 4: then ask that you pay towards that kitchen as a
23:54
Speaker 4: new renter.
23:56
Speaker 1: Same in Paris. You know, it's the same in Paris
23:58
Speaker 1: or Wasps across. That's all you have to have is
24:01
Speaker 1: as a sink. Basically. I remember when my my system
24:05
Speaker 1: moved to Paris and she arrived at what she thought
24:07
Speaker 1: it was going to be her goods department, found no kitchen.
24:11
Speaker 4: Yeah, it's the European thing. Sadly that's sadly quite standard,
24:14
Speaker 4: but it often comes furnished with terrible you know, lack
24:18
Speaker 4: of furniture, and they want money for it. Like I
24:21
Speaker 4: put in this wardrobe ten years ago. I need one
24:23
Speaker 4: thousand euros for it. Thank you very much. You want
24:26
Speaker 4: to Oh the line is quite long, oh.
24:29
Speaker 2: Standing, not sound quite as bad.
24:32
Speaker 4: I thought.
24:33
Speaker 2: If there's one thing you could change about the German
24:39
Speaker 2: housing market, like on one legislative thing.
24:42
Speaker 1: That you could do. Can't to say make it cheaper,
24:44
Speaker 1: that's not an acceptable answer.
24:46
Speaker 2: What would you do it a lot? I mean, I've
24:48
Speaker 2: got an idea already from talking to you. But yeah,
24:51
Speaker 2: it was the end that you would change specifically just
24:53
Speaker 2: one thing.
24:54
Speaker 3: I mean, for me, the sublet thing is totally crazy,
24:57
Speaker 3: right because it's sort of irrelevant to what your political
24:59
Speaker 3: persua is. This obviously, the designed effect of this law
25:04
Speaker 3: is not for people who are on this lease to
25:06
Speaker 3: be able to monetize their property at the expense of
25:08
Speaker 3: other people who are trying to find housing in Berlin.
25:10
Speaker 3: So to me, that's a bit a bit crazy. So,
25:13
Speaker 3: you know, also getting people out of it, out of
25:15
Speaker 3: apartments is very very challenging, which we understand again the
25:18
Speaker 3: spirit of what that is. But sometimes if this is
25:21
Speaker 3: a person's second property, they will just not move out
25:23
Speaker 3: of it and they'll be paying a very very deminimous
25:26
Speaker 3: rent for because they've had it for ten years. And
25:28
Speaker 3: then the person who owns it, even if this is
25:30
Speaker 3: a second property they just like to have, can't do
25:32
Speaker 3: anything about it or without extreme extreme difficulty.
25:36
Speaker 4: There isn't a lot of yeah control. There is that
25:39
Speaker 4: much movement within a lot of these markets, and part
25:42
Speaker 4: of it is, you know that we have we have
25:44
Speaker 4: these parts of Berlin like Kreutzberg and prince Lauburg, which
25:47
Speaker 4: is sort of the cool new areas. And then what
25:49
Speaker 4: happens is a bit like what might have happened in
25:52
Speaker 4: like Soho in New York or so on. The you know,
25:54
Speaker 4: the hipsters move in, the cool people move in, the
25:56
Speaker 4: people with money move in, and then we get what's
25:59
Speaker 4: called gentrification. And that's been a huge, huge thing here
26:02
Speaker 4: in Berlin over the last couple of years. That you know,
26:04
Speaker 4: the rich people, the investment bankers such as they exist,
26:07
Speaker 4: are destroying, you know, the sort of the fabric, the
26:10
Speaker 4: social and the cultural fabric of these areas, and there's
26:13
Speaker 4: really nothing you can do about it. I mean, it's
26:16
Speaker 4: it happens to every city, but in Berlin this has
26:18
Speaker 4: been a big debate over the last couple of years.
26:20
Speaker 4: And partly go back to your question, what would I change?
26:24
Speaker 4: Build more property? I think there's an a cute lack
26:26
Speaker 4: of property in Germany generally, but Berlin is particularly struck
26:31
Speaker 4: by this.
26:32
Speaker 1: Thank you so much, both of you. I think you
26:34
Speaker 1: know we learned today, John. We learned that the Berlin
26:37
Speaker 1: housing market is quite a lot like the UK housing market,
26:39
Speaker 1: and we also learned that rank controls are terrible, have
26:43
Speaker 1: unintended consequences, mostly bad.
26:46
Speaker 2: And also my next job should be a German stated agent.
26:54
Speaker 4: As belt.
26:54
Speaker 1: Yeah, that an equind dentist. Those are the two highest
26:57
Speaker 1: paying jobs that have come across recently. Thank you very much,
27:01
Speaker 1: you too, oh fas Ghost. Thanks for listening to this
27:06
Speaker 1: bonus episode of Merin Talks Money. Next month, we'll tackle
27:09
Speaker 1: the US housing market with the hosts of Bloomberg podcast
27:12
Speaker 1: Odd Lots in the meantime. If you like our show,
27:14
Speaker 1: rate review, and subscribe wherever you listen to podcasts positively
27:18
Speaker 1: if you can. This episode was hosted by me Meren
27:21
Speaker 1: Sumset Web alongside John Steppeck. It was produced by Somersadi
27:24
Speaker 1: with help from Robert Bragg, additional editing by Blake Maples.
27:28
Speaker 1: Special thanks to Oliver Crook and Benedict Cammell, and of
27:31
Speaker 1: course our weekly reminder to sign up to John's daily newsletter,
27:34
Speaker 1: Money Distilled. He recently wrote about the German housing market,
27:37
Speaker 1: so look for that edition in the archives