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Blog | 8. Juni 2017

BERLIN: HOME OWNERSHIP BEATS RENTING

Germans love to own residential real estate. That’s how it’s always been. But in the past, not so many households were able to fulfill their dreams of home ownership. Over the last few years, the situation has changed. Admittedly, the level of home ownership in Germany, at 46 percent, is still low in comparison with other European countries. But low interest rates and a construction boom have even improved the prospects of those in the lower middle class who want to buy their own homes. The high cost of rental housing in Germany’s major cities has certainly contributed to this development. In a number of large cities, it is now more expensive to rent an apartment than it is to buy one. More and more tenants are choosing to become homeowners – especially as they are well aware that rents are still rising. In Berlin’s western districts, net cold rents rose by almost 46 percent within the space of a decade (2004-2014), while in the city’s eastern districts rents pretty much doubled.

MORE EXPENSIVE ON THE SPREE? YES! BUT IT’S STILL MORE AFFORDABLE THAN MUNICH, STUTTGART OR FRANKFURT

It’s not only rental prices, property prices have also surged. All property owners reap the long-term benefits as the value of their property climbs. At the same time, it’s important not to delay the decision to buy an apartment for too long. Berlin has now become one of the most expensive cities in Germany. In the recent ranking in Postbank’s “Real Estate Housing Atlas”, Berlin landed in third place, just behind Munich and Hamburg.

Within four years, the price of one square meter of property in Berlin increased by some 38 percent. Buyers now have to stump up the equivalent of almost 16 annual salaries to buy a 100-sqm apartment in the city on the Spree – almost as much as in Hamburg. Only Munich, at 21 annual salaries for the same sized apartment, is significantly more expensive. Nevertheless, Berlin has one decisive advantage: With a square meter costing an average of €3,247, property in Germany’s capital is still much more affordable than in Munich (€6,149). Even in cities such as Frankfurt and Stuttgart, which trailed Berlin in the Postbank study, apartments are far more expensive, at between €3,500 to just under €4,000 per square meter.

OWNER-OCCUPIERS ENJOY ENORMOUS COST BENEFITS

Another recent study found that two thirds of all Germans believe that homeownership is fundamentally worthwhile. According to a survey carried out as part of the Sparda Banks’ “Housing in Germany 2017” study, the 31-40 age group is particularly keen on homeownership. And this is an age group that is very well represented in booming Berlin. Thanks to its flourishing economy and rapidly expanding start-up scene, Berlin is enticing a growing number of young people, which ensures that the average age of the population remains low. Last year alone, more than 60,000 new Berliners arrived to make their homes in the city. This is putting further pressure on the local housing market and makes the question, “Should I buy, or should I rent?” even more urgent. Anyone who still has lingering doubts should focus on the results of the Sparda Banks’ study: Owner-occupiers in Berlin currently enjoy cost benefits of an incredible 45 percent in comparison with living in rental housing. Hamburg is the only place in Germany where the savings are even higher, at 47 percent. The savings are lower in every other German metropolis, while the national average, at 41 percent, also fails to beat the cost benefits on offer in Berlin.

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Blog | 8. Juni 2017

BERLIN: HOME OWNERSHIP BEATS RENTING

Germans love to own residential real estate. That’s how it’s always been. But in the past, not so many households were able to fulfill their dreams of home ownership. Over the last few years, the situation has changed. Admittedly, the level of home ownership in Germany, at 46 percent, is still low in comparison with other European countries. But low interest rates and a construction boom have even improved the prospects of those in the lower middle class who want to buy their own homes. The high cost of rental housing in Germany’s major cities has certainly contributed to this development. In a number of large cities, it is now more expensive to rent an apartment than it is to buy one. More and more tenants are choosing to become homeowners – especially as they are well aware that rents are still rising. In Berlin’s western districts, net cold rents rose by almost 46 percent within the space of a decade (2004-2014), while in the city’s eastern districts rents pretty much doubled.

MORE EXPENSIVE ON THE SPREE? YES! BUT IT’S STILL MORE AFFORDABLE THAN MUNICH, STUTTGART OR FRANKFURT

It’s not only rental prices, property prices have also surged. All property owners reap the long-term benefits as the value of their property climbs. At the same time, it’s important not to delay the decision to buy an apartment for too long. Berlin has now become one of the most expensive cities in Germany. In the recent ranking in Postbank’s “Real Estate Housing Atlas”, Berlin landed in third place, just behind Munich and Hamburg.

Within four years, the price of one square meter of property in Berlin increased by some 38 percent. Buyers now have to stump up the equivalent of almost 16 annual salaries to buy a 100-sqm apartment in the city on the Spree – almost as much as in Hamburg. Only Munich, at 21 annual salaries for the same sized apartment, is significantly more expensive. Nevertheless, Berlin has one decisive advantage: With a square meter costing an average of €3,247, property in Germany’s capital is still much more affordable than in Munich (€6,149). Even in cities such as Frankfurt and Stuttgart, which trailed Berlin in the Postbank study, apartments are far more expensive, at between €3,500 to just under €4,000 per square meter.

OWNER-OCCUPIERS ENJOY ENORMOUS COST BENEFITS

Another recent study found that two thirds of all Germans believe that homeownership is fundamentally worthwhile. According to a survey carried out as part of the Sparda Banks’ “Housing in Germany 2017” study, the 31-40 age group is particularly keen on homeownership. And this is an age group that is very well represented in booming Berlin. Thanks to its flourishing economy and rapidly expanding start-up scene, Berlin is enticing a growing number of young people, which ensures that the average age of the population remains low. Last year alone, more than 60,000 new Berliners arrived to make their homes in the city. This is putting further pressure on the local housing market and makes the question, “Should I buy, or should I rent?” even more urgent. Anyone who still has lingering doubts should focus on the results of the Sparda Banks’ study: Owner-occupiers in Berlin currently enjoy cost benefits of an incredible 45 percent in comparison with living in rental housing. Hamburg is the only place in Germany where the savings are even higher, at 47 percent. The savings are lower in every other German metropolis, while the national average, at 41 percent, also fails to beat the cost benefits on offer in Berlin.

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