The costs of homeownership in Germany's first city have soared and are expected to keep rising. Specifically, the price dynamic seen since 2013 has averaged an annual growth rate of nine percent for existing condominiums. That said, keen pricing is matched by rock-bottom interest rates from which condominium buyers continue to benefit. This is the upshot of the latest residential property price index published by LBS-Nord, the state building and loan association for Hanover and Berlin. The index shows that in as many as ten of Berlin's twelve boroughs homeownership remains a far more attractive proposition than renting despite surging prices. Carried out by the empirica research institute on behalf of LBS, the index is based on an analysis of property listings in local dailies and online real estate portals during the first quarter of 2016. The average financing arrangement assumed for the purpose of the survey was a down-payment of 25 percent and a monthly encumbrance equivalent to an annual interest rate of five percent.
Homeownership Easiest in the Borough of Lichtenberg
According to empirica, the average price tag for existing property in Berlin is 2,920 euros per square metre at the moment. Citywide, prices for pre-used property – the term the survey uses for existing condominiums – have gone up at an average rate of nine percent a year since Q1 2013. Yet despite the steep price increases, the survey concludes that buyers clearly come out on top when compared to tenants, especially in Lichtenberg, where leads benefit from the current market situation more than in any other borough. The average price tag for pre-used residential property in Lichtenberg is 115,000 euros, implying monthly cost savings as high as 170 euros for homeowners. It is the widest gap between homeownership and tenancy anywhere in the city. Nearly as high at 150 euros a month are the cost savings in the borough of Neukölln, where condominiums sell for an average of 160,000 euros. According to the LBS experts, leads are well advised to take advantage of current interest rates to go for their dream home. After all, the low level of interest rates can drastically shorten the time it takes to repay your mortgage loan.
Annual Price Hikes in the Double-Digit Range
While prices have been rising at an average of nine percent, according to the survey, some of Berlin's boroughs have registered double-digit price hikes in the years since 2013. The steepest up-trend over the past three years has been reported from Neukölln where condo prices have gone up at an annual rate of 14 percent. Notwithstanding this brisk-paced price growth, however, buyers are still better off than tenants, even in this borough. Other boroughs exposed to hefty annual price gains include Spandau with an increase of 12.3 percent, Tempelhof-Schöneberg (up 11.9 percent), Reinickendorf (up 11.5 percent), Marzahn-Hellersdorf (up 11.2 percent) and Friedrichshain-Kreuzberg (up 10.8 percent). Aside from the buying-versus-renting comparison, empirica researchers found the most affordable pre-used condominiums in Marzahn-Hellersdorf. But even in this borough, prices have skyrocketed over the past three years. As recently as three years ago, one in every four condominiums here was available for a square-metre price of 950 euros. Today, the going rate is 1,389 euros.