Differences in patterns of home ownership in the
New and the Old Federal States

by: Alice Gärtner

Winter Semester 2005 / 06

Contents

1 Approach 2

2 The situation after the Second World War 2

2.1 The hour zero  2
2.2 The division of Germany  3

3 Different developments 3

3.1 Housing politics in the GDR  3
3.2 Housing politics in the FRG 5

4 Changes after the reunification  7

4.1 Steps to the reunification 7
4.2 Problems during the transition to market economy  8
4.3 Privatisation of residential property in the New Federal States 10

5 Patterns in home ownership in 2002  11

6 Conclusion  12

References  13

Abstract

This paper outlines the differences in patterns of home – ownership between the New and the Old Federal States in Germany. First the situation after the Second World War in 1945 and the development of the GDR and the FRG under occupation are shown. Afterwards the changes and problems in housing in the former GDR will be presented. Especially the privatization of flats in the New Federal states has also been worked out in detail. In order to have a better overview of the current owner occupied housing, statistical data are quoted.

1 Approach

This paper shows an overview of the differences in patterns of home – ownership between the New and the Old Federal States in Germany. To find reasons for these differences we have to consider the situation after the Second World War in 1945 and the development of the GDR and the FRG under occupation. The economical situation of these two states was strongly influenced by the political attitudes of the Soviet Union and the USA. For that reason it had to develop in different directions inevitably. The reunification of Germany in 1990 caused a lot of changes especially in home ownership in the former GDR, which will also be presented in the following paper. Finally statistical data concerning the owner occupied housing will characterize the current situation.

2 The situation after the Second World War

2.1 The hour zero

Immediately after World War II all people had to cope with equal living conditions. Nearly everybody was placed under disability; nearly everybody was hungry, poor and worried about its future. The end of the war meant a crash in all parts of live. Money had lost its importance and economy corresponded to the stage of Stone Age.¹ Nearly every city was destroyed. About 7,000,000 Germans died during the Second World War. Millions of Germans were still in other countries and millions of refugees and people from the Soviet occupation zone hiked towards the west. This period was characterized by serious housing shortage, so the survivors had to live in cellars as well as in damaged buildings.² To control this situation the immigration was made more difficult. People were relocated to the country by threat of withdrawal of food stamps and the right of residence.³

2.2 The division of Germany

After the winners of the Second World War – Soviet Union, USA, France and Great Britain – occupied the defeated Germany, they divided it into four zones of occupation to weaken it. Nevertheless it was intended that Germany should remain an economical and political unity. However, the Soviet Union wanted to transform their occupied zone into a communist state. They dismantled large fabrics to satisfy their reparation claims and changed the economical patterns to create a central controlled economy. In contrast, the USA, France and Great Britain supported West Germany to build a democratic state. In 1947 the American as well as the British occupation zone created a uniform economic area, in which the French occupation zone joined in 1949. The USA offered to Germany and other anticommunism countries economical aid. The Soviet Union, however, rejected the offer, but permitted every country, which were controlled by them, to accept. In 1948 the western zones implemented a currency reform to improve the economical situation. The currency reform in the Soviet occupation zone missed this aim. On 23rd May 1949 the constitution of the FRG was passed. As a reaction to this the GDR was founded on 7th October 1949 thus the division of Germany was conducted. ¹

3 Different developments

3.1 Housing politics in the GDR

The GDR consisted of the today’s Federal States Saxony, Thuringia, Saxony – Anhalt, Mecklenburg – Western Pomerania, Brandenburg and Berlin – East. During the first years after the Second World War it was governed by the SMAD that enforced an economical -, an administrative – and a political reorganization as well as a cultural change according to the Soviet system. Already in 1945 the SMAD arranged for the agrarian reform, which meant about 7,000 owners of land bigger than 100 ha were dispossessed without compensation. Dispossessions in industry, retail as well as in trade followed. The land was distributed to 500,000 people and the communities. Due to the fact that farmers got less than 20 ha of a plot of land, they were not capable to farm profitably. For this reason several farmers amalgamate to the first LPG in 1972.¹ During the period of socialism there existed two types of home ownership. The first one is the socialist property, which could be divided into the following three subtypes: the national property, the cooperative property and the social organisations’ ownership. The second type is called individual property, that consists of personal ownership for own needs and private ownership for renting. The latter one was government controlled in order to prevent exorbitant rents and real estate speculations.

[...]

1 See Jaenecke, Heinrich, Stunde Null, 2002

2 See von Sternburg, Wilhelm, Geschichte, 2005, p. 254 – 255

3 See Schulz, Günther, Wiederaufbau, 1994, p. 45 – 111

1 See Gros, Jürgen; Glaab, Manuela, Deutschland, 1999, p. 7 – 34

1 See Weber, Hermann, DDR, 2000, p. 3 – 14