Germany’s capital Berlin remains one of the countries most energetic and enterprising cities, the economy and population has continued to rise for the last decade with the exception of 2009. And with that has the need for living space and the demand for housing remains high. This can be seen from the continued increase in rents, offer prices for apartments and the rising prices seen in Berlin’s bacon belt – the surrounding suburbs.
Berlin’s surrounding suburbs have increased by 12 percent in 2018 compared to the previous year with an average of now €4150 per square meter, as reported in the current Housing Market Report Berlin, which was published by Berlin Hyp and the real estate service provider CBRE. This increase is approximately at the level of 2017, at that time prices rose on average by 12.7 percent. Commuters are uplifting the region’s market with around one million people living in the surrounding areas of Berlin city.
It is striking that even the supposedly less attractive surrounding districts are increasingly attracting the attention of buyers and investors. The situation in the district of Reinickendorf is particularly blatant, where the median price per square meter rose by an impressive 23.3 percent compared to the previous year to currently €2991 and the district will have one of Berlin’s largest building land reserves at its disposal when Tegel Airport finally closes in 2020. The family friendly Marzahn-Hellersdorf and the sprawling Spandau borough known for its parks and waterways and charming old town are recording unusually strong increases of rates at approximately 20 percent.
Inexpensive, no longer exists
Karsten Jungk, Managing Director of the real estate consultancy Wüest Partner Germany, confirms the development: “In the northeastern districts of Berlin in particular, the number of inhabitants will rise above average in the next ten years. Apartments outside the S-Bahn ring with good transport links are therefore in great demand.”
This indicates a clear trend, especially in the previously cheaper and less expensive locations, prices are rising sharply due to the high demand and the hoped-for new construction not getting underway. The region that benefits from this development is Berlin’s bacon belt with the southern Brandenburg cities of Potsdam and Teltow recorded increases of 12 and 14 percent in 2018. Both already a significantly stronger population growth above the city of Spreem with only 9.6 percent. In the west, Falkensee and Nauen are booming with Bernau on the rise in the north.
The high demand is only one reason for the persistent price boom for apartments. The fiercely competitive rental market in Berlin is also making it increasingly common for apartment seekers to consider buying a home. With the low interest rates, buying a home is becoming attractive as the monthly instalments are often lower than the rent currently required for a similar apartment. The acquisition of home ownership applies to both domestic and international buyers as a solid means of asset accumulation and retirement planning.
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