If you want to buy a property in Berlin, you will find one of the most popular real estate markets in Germany. When looking at prices per square meter, it is immediately apparent that they have risen continuously in recent years. But there is at least one piece of good news: Berlin is a large city whose districts differ significantly from one another, as do their real estate prices. The prices of a residential area in the city center differ significantly from the cost of an apartment in a quiet location. We reveal the current asking prices and analyze the price trend for condominiums in Berlin in the first months of 2022.
The real estate boom in Berlin will continue in 2022
It was assumed that the global coronavirus pandemic and the outbreak of war between Ukraine and Russia would have an impact on real estate prices in Berlin. Added to this are the steady inflation and rising interest rates. Nevertheless, it can be observed that the super cycle, which has now lasted 15 years in Berlin, is continuing. It is not foreseeable that prices will fall in the future; instead, they are continuing to rise. However, an analysis shows that this increase is shallower than in previous years.
Initial fears focused on the potential impact of the war between Russia and Ukraine. However, apart from the increased burden on the construction sector caused by high material and energy costs, no far-reaching consequences for the German capital’s real estate market have yet been observed.
The most important price-setting factors on the Berlin real estate market
We would like to show you which six factors have a particular influence on the formation of the price on the Berlin real estate market:
Tangible assets as investment objects
Real estate in Berlin and every other city is under the influence of drastically rising inflation and high geopolitical uncertainty. Against this backdrop, it is particularly remarkable that Berlin real estate remains an important and extremely reliable tangible asset. The real estate market in Berlin offers investors reliable and highly resilient protection against potential losses in value.
Expected interest rate increases
Investors are currently acting under the motto “If you can buy, you will”. Banks anticipate that the ECB’s key interest rates will rise and are therefore also increasing interest rates on loans. However, the liquidity of institutional and private investors remains constant. Investors are therefore activating their cash reserves with a view to the upcoming increase in key interest rates. So far, no relief for home buyers can be observed. This could include falling house prices, for example, which would counteract rising interest rates.
Rising construction costs and supply shortage
Construction costs have been rising continuously for several years now. In addition, there are now also interrupted supply routes, sanctions and in some cases even total defaults by Russian producers. They are further fueling the rise in construction costs. Oil-related products, steel and timber are particularly affected by this. The increase in construction costs is passed on to future property buyers. This leads to a sharp rise in prices. In addition, new construction projects that are no longer profitable due to the rise in construction costs are being postponed. This results in a significant shortage of supply.
Regulatory consequences
The Berlin housing market is subject to numerous requirements and comprehensive regulation. Conversion bans and milieu protection areas prevent living space from changing. No new supply can be created by dividing up existing apartments. As a result, prices for existing housing continue to rise.
Developments take place selectively and depending on the situation
It is noticeable that housing in Berlin is not developing evenly. Instead of undifferentiated price increases, developments are very sporadic. They are highly dependent on location, which is why price exaggerations are no longer automatically balanced out.
Condition and quality of properties are becoming more important
The catch-up effects are slowly coming to an end. This means that the location quality of apartments is becoming increasingly important. Neglected apartments whose technical condition is inadequate are now much harder to find a buyer for.
Average asking prices for properties in Berlin in 2022
Overall, it is clear that asking prices for real estate are continuing to rise. This applies to both apartment buildings and condominiums. However, it is noticeable that the extent of the price increase depends on the district in which the property is located. The median increase in asking prices is over five percent. In Berlin, prices per square meter for properties for sale were around EUR 5,400 on 30 May 2022. In the past 12 months, almost 27,000 existing apartments were offered for sale in Berlin. However, the development is by no means homogeneous, but differs significantly in the various districts. In some locations, purchase prices were achieved that were significantly above sellers’ expectations, while sales in other districts were somewhat subdued.
Price increase rate and current average price for condominiums in the portfolio
Depending on the data available, a price increase rate of between five percent and eight percent can be calculated for existing apartments. The average price for existing apartments in 2022 was therefore well above EUR 5,000 per square meter for the first time.
The price trend in recent years shows a total price increase of over 300 percent. In 2012, the average price per square meter was still around EUR 1,700.
Price increase rate and current average price for new-build apartments in Berlin
In the new-build apartment segment, a significantly stronger price increase can be observed than for existing apartments. Within one year, prices for new-build apartments have risen by around 18.5 percent. The average list price for apartments in this segment over the past 12 months was over EUR 8,100 per square meter. The number of listings has declined significantly, with around 5,200 properties.
Rate of price increase and current average price for existing apartment buildings
Prices for apartment buildings in Berlin have risen by over 9 percent overall. A square meter now costs just under 3,600 euros. These figures represent the average, but there is a clear spread between the different districts.
Prices for existing apartments in 2022: Berlin districts at a glance
As already mentioned, prices vary greatly in the different districts of Berlin. For this reason, we would like to take a closer look at the price trends in the individual districts of the German capital.
The center: Charlottenburg-Wilmersdorf, Mitte, Friedrichshain-Kreuzberg
According to the current purchase price index, the average purchase price for an existing apartment in Berlin is around EUR 5,140 per square meter. However, it is noticeable that top prices are achieved in the center of Berlin, which differ significantly from the aforementioned average. Prices per square meter are particularly high in the districts of Friedrichshain-Kreuzberg, Charlottenburg-Wilmersdorf and Berlin Mitte.
As in the previous year, the Charlottenburg-Wilmersdorf district remains the undisputed leader. Every second existing property in this part of the city is offered at a price of over EUR 5,880 per square meter. A closer analysis even reveals prices of up to almost EUR 7,300 per square meter. Berlin Mitte takes second place in the ranking of Berlin’s most expensive districts. The average purchase price for existing apartments here is around EUR 5,600 per square meter. The top offers, however, have prices of up to almost 7,700 euros per square meter. In third place is the district of Friedrichshain-Kreuzberg. Here, average prices per square meter of around 5,400 euros are paid for existing apartments.
The southwest of Berlin: Tempelhof-Schöneberg and Steglitz-Zehlendorf
The south-west of the German capital is particularly well-known for its extensive green spaces. The Wannsee is located here, which is visited by hundreds of Berliners in summer. The south-west of Berlin also boasts the Schöneberg Nature Park and Tempelhofer Feld. The leisure facilities are extremely extensive and increase the popularity of the districts. The average price for condominiums in Steglitz-Zehlendorf is over EUR 4,700 per square meter. In the Tempelhof-Schöneberg district, it is around 4,900 euros per square meter. However, there are certainly offers that are in a higher price segment. The condominiums have a price per square meter of at least 5,400 euros.
The south of Berlin: Neukölln and Treptow-Köpenick
Neukölln’s neighborhoods are home to a wide variety of cultures. The district is one of the most vibrant parts of the German capital. The special atmosphere of the district is enhanced by oriental bakeries, numerous artists’ studios and the famous weekly market on Maybachufer. If you want to go for a walk in Neukölln, you can do so with great enthusiasm in the Britzer Garten. You can experience a piece of history up close in the Rixdorf district. The Neukölln district is extremely popular with both long-established Berliners and newcomers. The average price per square meter for condominiums is around 4,640 euros. However, there are also higher-priced properties. Their price approaches 5,700 euros per square meter. Treptow-Köpenick is particularly popular with nature lovers. The district in the south of Berlin boasts the extensive Spreepark, which is located in the Plänterwald forest. The standard price for an existing apartment averages 4,450 euros per square meter. If you are lucky, you will find a slightly cheaper property with a price per square meter of around 3,700 euros.
The north and east of Berlin: Pankow and Lichtenberg
The thriving north-east of the German capital is a colorful place. Pankow is primarily known for Prenzlauer Berg, Mauerpark and the Kulturbrauerei. However, the popularity of the district can be seen in the high purchase prices for existing apartments. Properties in Pankow can be found from an average price of 5,560 euros per square meter. However, there are also apartments that are sold at a significantly higher price. Such higher-priced offers have a price of up to 6,670 euros per square meter. The district of Lichtenberg in the north-east of Berlin has lower average prices for existing apartments. Here, an average of around 3,800 euros per square meter can be expected. Top prices, however, reach the mark above 5,300 euros per square meter.
The suburban districts: Marzahn-Hellersdorf, Spandau and Reinickendorf
Those who venture further to the outskirts of the city are rewarded with a rural idyll and close proximity to nature. More and more families with young children are therefore deciding to buy a property on the outskirts of Berlin. Another advantage is that the prices are very different from the asking prices for condominiums in the center of Berlin. Spandau, with its extensive parks, picturesque waterways and picturesque old town, is the perfect place to own your own home if you want to live in a quiet location close to the city. Affordable properties can be found here from 3,400 euros per square meter. Existing apartments, which are offered at top prices, are priced at around 4,000 euros per square meter.
Anyone looking for affordable residential property in the Berlin area should take a closer look at Reinickendorf. The district offers numerous opportunities to spend leisure time in nature with family or friends. Tegeler Forst is particularly popular. The average price per square meter for a condominium in the Reinickendorf district is around 3,930 euros.
It is cheapest in the east of Berlin, in the district of Marzahn-Hellersdorf. The average asking price in this district is 2,960 euros per square meter. Top prices, on the other hand, crack the 3,500 euro mark per square meter of living space.
Real estate price increases also in the Berlin area
The surrounding area of Berlin is becoming increasingly expensive due to its quiet location and close proximity to the German capital. Until recently, you could find cheap offers for condominiums here. However, prices have risen sharply in recent years. It is also noticeable that there is a large price gap. It is therefore worthwhile not to despair in your search for your dream property and to view various offers.
Current trends in the Berlin real estate market
Berlin remains one of the most popular locations for real estate in Germany. Residential properties stand out in particular because they can be scaled up as apartment buildings or converted into investments. What has attracted particular attention is how stable the real estate market in Berlin has remained during both the global coronavirus pandemic and the war in Ukraine. So far, no influences of these two factors have been observed. Demand continues to support the development of prices. However, it is assumed that the large number of refugees from Ukraine will influence Berlin’s real estate market in the future.
It should not be overlooked that banks are currently raising interest rates. This is having a negative impact on the capacities of private investors. At the same time, it cannot be denied that there is still a lot of money in circulation, which can be traced back to the liquidity of potential investors. However, the rise in interest rates means that interested buyers are analyzing a property much more closely. Excessive top prices are no longer being paid, even if this dampens the owners’ sales success.
Regulations are now an integral part of Berlin’s real estate market. They are here to stay, but innovations are currently unlikely. The pre-emption practice and the rent cap were abolished in 2021 following court rulings in Leipzig and Karlsruhe. The milieu protection prevents the conversion or modernization of many apartments. Nevertheless, it can be observed that the real estate market is constantly evolving throughout Berlin.
Construction activity in the German capital is extremely stable and has increased. This will ease the rental market in the long term. At the same time, land prices and construction costs are at a very high level. This is reflected in rental prices and will continue to push up prices for new-build and existing apartments in the future. Ultimately, the net income and purchasing power of households will limit the prices of owner-occupied apartments.
In the districts of Steglitz, Wedding, Friedrichshain and Prenzlauer Berg, property prices have risen only slightly over the past 12 months. Downward trends can be observed in Weißensee, Tiergarten and Neukölln.
Political outlook for the year 2022
The new government is once again setting up an independent federal ministry. This is responsible for urban development, housing, the building industry and construction. It cannot be overlooked that the SPD’s Federal Minister, Klara Geywitz, has brought in renowned reinforcements. Both State Secretary Cansel Kiziltepe and State Secretary Sören Bartol, both members of the SPD, are clear supporters of the pre-emption practice and the rent cap. While Kiziltepe is in favor of creating well-founded legal certainty for the pre-emption practice, Bartol clearly sees the competence for the rent cap with the federal government.
Which political decisions can actually be made in the current government phase depends on both the ideas of the politicians and the federal budget. However, the following ideas can be observed. They may well make it onto the federal government’s agenda in the next four years:
- The DIW’s idea is new. It calls for special levies for high rents.
- It is likely that the rent cap will be tightened.
- In future, the municipalities will be obliged to draw up the rent index on a uniform basis.
- The speculation period is to be abolished in its current form or the holding period may be extended. The possibility of profit taxation remains an important issue.
- The probability of a nationwide rent moratorium is increasing, but at the same time it is unlikely that a nationwide rent cap will be introduced.
- Share deals may be restructured and lose economic attention as a result.
- It seems almost certain that the permissible rent increase will be capped in future. Instead of the current 15 percent, the rent may only increase by 11 percent within three years.
New regulations are being sought. At the same time, greater efforts are being made to boost new construction in Berlin. It remains to be seen how the areas of housing and construction (SPD), the Ministry of the Interior (SPD), justice (FDP) and finance (FDP) will unite their interests.
Conclusion
The average price per square meter for condominiums rose again last year and currently stands at around EUR 5,400. Although asking prices in the German capital have therefore risen, they are still below the average prices in other German cities. Munich remains in first place with EUR 9,530 per square meter. Frankfurt am Main is in second place. In the beautiful city on the Main, asking prices for apartments average 6,950 euros per square meter. Hamburg is also more expensive than Berlin. On average, a condominium in the northern German city on the Elbe costs just under 6,300 euros per square meter.
It is clear that it is worth analyzing the offers in Berlin and the surrounding area in detail. Although the housing market is highly competitive, it has proven to be extremely stable in recent years. The districts of Prenzlauer Berg, Friedrichshain-Kreuzberg and Berlin Mitte are particularly worth a look if you are looking for a condominium in the center of the German capital. Hardly any other city manages to combine culture, diversity, gastronomy and nature so seamlessly. If you are looking for your very own dream property, you should not be put off by high prices or competitors. Prices fluctuate greatly, which is why you can always find unbeatable offers at below-average prices, even in the most sought-after parts of Berlin.
