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Blog | 29. November 2016

MORE AND MORE BERLINERS ARE BUYING APARTMENTS

Berlin has long since been more than just a first-class tourist destination. And once they have experienced the city, a short stay just isn’t enough for a growing number of people. People are moving to the pulsating Spree metropolis from all over, drawn by the city’s trend-setting cultural and entertainment scenes, multi-facetted shopping and eclectic restaurants, all of which mirror Berlin’s well-established internationality. Then there’s the city’s strong employment growth, which is also drawing large numbers of people, above all young people, to the German capital.

So, the fact that space in the city on the banks of the Spree River is at a premium should come as no surprise. According to official forecasts, by 2030, there will be roughly 266,000 more people living in Berlin than there are today. This makes living space extremely valuable. Even today, the supply of housing can hardly satisfy current levels of demand. And rents are still rising rapidly, despite rent controls. This year alone, the IVD real estate federation reports that rents have risen by between 5.5 and 6.7 percent – depending on location.

BERLIN’S HOMEOWNERSHIP RATE IS JUST 15 PERCENT

Given all of these developments, more and more Berliners are seriously considering buying their own apartments. Anyone who can afford it is investing now, before prices increase further. After all, the condominium prices are also rising strongly: Existing condominiums now cost an average of € 2,100 per square metre, roughly 13.5 percent more than in 2015; and newbuild apartments cost an average of € 3,600 per square metre – a year-over-year increase of 12.5 percent. In sought-after neighbourhoods in Berlin-Mitte, Charlottenburg and Friedrichshain, the prices are much higher still. And there’s no end in sight.

But all of this is good news for buyers – both for owner-occupiers, and for investors hoping to make capital gains. In the long-term, owning your own home is cheaper than paying years of rent. Especially as mortgage interest rates are lower than ever: According to data compiled by FMH-Finanzberatung in Frankfurt am Main, banks are currently charging an average of 1.07 percent on a fixed-rate, 10-year mortgage. A 20-year mortgage now costs an average of 1.74 percent (as of 18.10.2016).

CONDOMINIUMS ARE A SECURE INVESTMENT

The same is just as true for buy-to-let investors. As Berlin booms, the city’s chronic housing shortage, especially in central districts, continues to make housing a much sought-after commodity – and a secure investment. Average rents in Charlottenburg-Wilmersdorf have already climbed to € 11.50 per square metre. Berlin-Mitte has the next highest average rent, at € 11.25/sqm. Steglitz-Zehlendorf and Tempelhof-Schöneberg share third place, at € 10.25/sqm. Even tenants in less affluent residential neighbourhoods are paying an average of € 9.50 per square metre.

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Blog | 29. November 2016

MORE AND MORE BERLINERS ARE BUYING APARTMENTS

Berlin has long since been more than just a first-class tourist destination. And once they have experienced the city, a short stay just isn’t enough for a growing number of people. People are moving to the pulsating Spree metropolis from all over, drawn by the city’s trend-setting cultural and entertainment scenes, multi-facetted shopping and eclectic restaurants, all of which mirror Berlin’s well-established internationality. Then there’s the city’s strong employment growth, which is also drawing large numbers of people, above all young people, to the German capital.

So, the fact that space in the city on the banks of the Spree River is at a premium should come as no surprise. According to official forecasts, by 2030, there will be roughly 266,000 more people living in Berlin than there are today. This makes living space extremely valuable. Even today, the supply of housing can hardly satisfy current levels of demand. And rents are still rising rapidly, despite rent controls. This year alone, the IVD real estate federation reports that rents have risen by between 5.5 and 6.7 percent – depending on location.

BERLIN’S HOMEOWNERSHIP RATE IS JUST 15 PERCENT

Given all of these developments, more and more Berliners are seriously considering buying their own apartments. Anyone who can afford it is investing now, before prices increase further. After all, the condominium prices are also rising strongly: Existing condominiums now cost an average of € 2,100 per square metre, roughly 13.5 percent more than in 2015; and newbuild apartments cost an average of € 3,600 per square metre – a year-over-year increase of 12.5 percent. In sought-after neighbourhoods in Berlin-Mitte, Charlottenburg and Friedrichshain, the prices are much higher still. And there’s no end in sight.

But all of this is good news for buyers – both for owner-occupiers, and for investors hoping to make capital gains. In the long-term, owning your own home is cheaper than paying years of rent. Especially as mortgage interest rates are lower than ever: According to data compiled by FMH-Finanzberatung in Frankfurt am Main, banks are currently charging an average of 1.07 percent on a fixed-rate, 10-year mortgage. A 20-year mortgage now costs an average of 1.74 percent (as of 18.10.2016).

CONDOMINIUMS ARE A SECURE INVESTMENT

The same is just as true for buy-to-let investors. As Berlin booms, the city’s chronic housing shortage, especially in central districts, continues to make housing a much sought-after commodity – and a secure investment. Average rents in Charlottenburg-Wilmersdorf have already climbed to € 11.50 per square metre. Berlin-Mitte has the next highest average rent, at € 11.25/sqm. Steglitz-Zehlendorf and Tempelhof-Schöneberg share third place, at € 10.25/sqm. Even tenants in less affluent residential neighbourhoods are paying an average of € 9.50 per square metre.

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