Potsdam, the state capital of Brandenburg and the only other major city within the Berlin metro region, is one of the areas where residential rents and prices have experienced particularly brisk growth lately. In 2015 alone, condominium prices in Potsdam rose by 6.1 percent. Indeed, Munich is the only other city in Germany that tops Potsdam's runaway costs of homeownership, which are on a level with those in Berlin or Frankfurt am Main. These figures are taken from the latest city ranking by the financial magazine Finanztest. The survey used stats on detached homes and condominiums provided by the VDP Association of German Mortgage Credit Banks, which has evaluated nearly three million real estate transactions since 2003. The stats consisted of prices and rents negotiated in conjunction with actual sales and lettings, respectively. The data pool was limited to houses and condominiums redeveloped or newly built in the year 2000 or thereafter.
Potsdam has the Highest Housing Price Level of any East German City
According to the survey, condominium prices in Potsdam have gone up by 23 percent over the past four years, paralleled by a rental growth of 17 percent. Moreover, Potsdam tops the list of cities in East Germany with the highest square-metre prices for condominiums. Prospective buyers are looking at a going rate of 2,600 euros per square metre for well-appointed condominiums, while square-metre prices in prime locations may go as high as 4,000 euros. Experts believe that the brisk rent and price growth in Potsdam is not least explained by the city's proximity to Berlin, making it particularly lucrative to investors. Another enticement is that Potsdam's real estate market still has considerable upside potential. Compared to the price performance on Berlin's real estate market, the trend in Potsdam has actually been quite modest. It needs to be remembered that prices for well-appointed and well-located condominiums in Germany's capital shot up by 35 percent between 2011 and 2015. Premium locations actually registered price hikes of 40 to 44 percent. With all of this in mind, the experts of Finanztest do not expect the property boom in Potsdam to end any time soon. Despite the 6.1-percent rise in condominium prices between 2014 and 2015, this city that was once the residence of the Prussian royal court and is now home to a World Heritage Site will probably see another price hike by more than three percent in 2016.
Potsdam Shows Steady Demographic Growth
The main reason for this optimistic assumption is Potsdam's steady rise in population. Its demographic growth is boosted not least by massive incoming migration: Roughly 12,000 new residents moved to Potsdam in 2015, about 1,600 more than the year before. During the same period, only 8,331 residents moved away. Potsdam's city council actually predicts that the population total will have risen to 192,000 residents by 2030. Accordingly, demand for housing will maintain its dynamic present pace, and so will the city's residential rents and prices.