“Coping with shrinking cities is the major public policy issue in Eastern Germany“

Since when has it been accepted as a serious issue in Germany and how did it develop?

“The phenomenon of shrinking cities itself is not new. A long-term trend of population and employment losses already became apparent in the crisis of the older industrialized cities in the 1970s and 1980s in West Germany. At that time, most of the urban researchers and politicians explained shrinkage as an economic adjustment problem of the less fortunate regions or as a transitional period in the life-cycle of urban agglomerations. Thus the issue of shrinkage – as a long-term problem for the cities’ affected – was not seriously addressed.
The first time that the issue of shrinkage was seriously raised was by the end of the 1990s when it became apparent that a massive boom in housing investment, through state subsidies since unification, coupled with a dramatic depopulation of eastern German cities had lead to a high rate of vacant housing units in Eastern Germany. An expert commission estimated in 2000 that that more than one million housing units in Eastern Germany were empty, thus affecting roughly 14% of all housing units in the region. In many eastern German cities the number of foreclosures and bankruptcies, of both communal and private housing owners, were rising and a collapse of the whole housing market was feared. The one million vacant housing units in eastern Germany, to name only one of the most obvious consequences of shrinkage, have changed public and academic debates in Germany. Today, coping with shrinkage in urban development is the major public policy issue in Eastern Germany. “

Are shrinking cities just an issue in Eastern Germany or in West Germany as well? What kind of places and what type of housing/neighbourhoods are most strongly affected?

“Urban shrinkage, characterized by the long-term loss of population and workplaces, is definitely not a phenomenon that is confined to Eastern Germany. It has become increasingly common in Germany as a whole. However, there are differences between the Western and the Eastern part. While in the western part of Germany it is primarily the old-industrialized cities in the region of the Ruhr, the Saarland and Upper Franconia that lose population and workplaces, in eastern Germany more or less all cities and regions are confronted with massive processes of shrinkage in urban development since unification. There are a just a few growing cities in eastern Germany.”

A shrinking population leads to vacancy of houses. Where was this problem the most severe: in public or private housing?

“In Eastern Germany vacancies are widespread, since more or less all segments of the housing market are affected. The only segment that is less affected is one - and two family houses. The structural oversupply of housing in Eastern Germany is the result of a massive boom in housing investment due to intense subsidies since unification on the one hand, and a dramatic depopulation of German cities on the other after unification. East Germany’s population as a whole has dramatically shrunk since the beginning of the 1990s. Cities have been most affected by the population losses. There are three processes which have contributed to the significant decline of residents in cities. One important process is labour market migration. The transformation of the economy (de-industrialization) has resulted in high unemployment rates. People - fleeing from high unemployment rates in East German cities - have significantly reduced the cities' population bases by migrating to West Germany. The second process is suburbanization, which has forcibly emerged since 1990 due to the fact that suburbanization was successfully prevented by the socialist housing policy. Besides the migration processes, changes in the demography, such as the dramatic drop in birth-rates, have also contributed to a decline in population. At the same time, a dramatic depopulation in East German cities occurred, several new housing schemes – including tax abatements, direct subsidies, as well as lower interest loans - were launched to increase the supply of good, modernly equipped housing units. All of this public sector investment resulted in a massive growth in new construction and modernization. Theses policies have contributed to a situation, where investments in the housing sector were partially decoupled from housing demand. It was not absolutely necessary, in the first years, that the newly constructed or renovated apartments be rented for their owners receive generous tax abatements. To put it shortly: The vacant housing problem is preceded and caused by the general trends of depopulation and deindustrialization in Eastern Germany.”

What has been the approach to bring the number of vacant houses down?

“In 2002 a joint federal and federal states programme (the so-called ‘Stadtumbau Ost’) was introduced to enable local administrations and city governments to develop coherent and city-wide approaches to the vacant housing problem. Its major goal is to retain socially mixed and attractive inner cities in eastern Germany. Therefore, comprehensive urban development plans, funds for the demolition of housing units, as well as, the upgrading of neighbourhoods have been introduced as main policy strategies. Supported by federal funds many cities have started to address the vacant housing problem on the local level, and meanwhile more than 220.000 housing units have been removed.”

One effect of shrink in cities is that the quality of houses, facilities and services decreases. How did this reflect on liveability in shrinking cities? How should (local) governments cope with that?

“The question of how to retain urban liveability in shrinking cities and neighbourhoods is indeed a crucial one. A ‘worst-case-scenario’ is that shrinking cities – or neighbourhoods highly affected by population loss and vacant housing units – are more or less abandoned by the ‘better off’. Evidently, low demand for houses and services can fuel a self-perpetuating process where communal and private services are becoming less efficient, but more expensive. If owners and companies make up for these losses by reducing maintenance expenditures services deteriorate, causing more people to flee the area, further aggravating the existing problems. The outward mobility of the ‘better off’ will mean a cumulative downgrading of these areas due to rising vacancy rates, the deterioration of buildings and infrastructure, as well as the concentration of marginalized residents which will in turn worsen the situation even further. Thus, political interventions have to prevent a cumulative downgrading in these areas. This means that the quality of life for the remaining residents has to be kept and enhanced .”

At first, municipalities with shrinking cities started competing with each other, later on they bundled their strengths within regions to tackle the problem together more efficiently. Was there a similar process in Germany? Was there a proper cooperation between municipalities and the government/federal state/housing corporations?

“In practice, there is a strong cooperation between the municipalities and the communal housing companies. They own large stocks in areas and have a strong interest in a neighbourhood based market clearance. However, the interest of the communal housing companies and the municipalities are often not the same. While the communal housing companies are interested in a reduction in the supply of housing as quickly and efficiently as possible, local administrations and governments must have an interest in a socially adequate solution for the affected neighbourhoods, which might not always be the economically most efficient one. Evidence shows that most of the funds from the Stadtumbau Ost Programme is used for the demolition of housing units in the large-scale housing estates of socialism, where the communal housing companies own large stocks. The issue of how to incorporate small private property owners who are owning houses in the inner city is still unresolved."

Does shrink in cities also offer certain opportunities? How to make use of them?

“At first glance, shrinkage seems to have only negative implications for the cities affected: high vacancy rates, outward migration of the better-off, loss of financial power, underutilized infrastructure and so one. And, to be clear on that, cities affected by shrinkage are indeed in a problematic situation. However, the lessening power of economical imperatives in those cities can also be used for strengthening or building a new quality of life in those cities. Initiatives that are discussed in this context are the promotion of new types and forms of housing (e.g. self-user initiatives), new forms of temporary uses (e.g. art) and more green and open spaces (e.g. community gardens). To make sure that shrinkage does not only have negative implications means that the city governments have to steer and manage the processes of shrinkage. This means, first of all, that shrinkage as a long-term trend is accepted and not negated. Evidence from cities in the US and Great Britain, where the state has traditionally played a less important role in urban planning, points to the fact that an unregulated process of shrinkage can lead to a physically fragmented and socially polarized urban structure. However, one has to admit that the conditions under which the weakness of shrinking cities can be turned into strength are not only produced in cities. On the national level also the necessary adjustments in the policy frame have to be made that allows cities to deal in a forward-looking way with urban shrinkage. The joint federal and federal-states programme ‘Stadtumbau Ost’ is an important step in this direction. However present policy strategies within the frame of the programme focus too tightly on housing market issues alone.”

EUKN, Jasper Witjes & Simone Pekelsma