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19 06 2014
F+B Purchase Price Ranking: Berlin Comparatively Affordable

Condominium prices rose at a rate of 5.9 percent across Germany in 2013. This is the upshot of the F+B Housing Index published by the F+B research institute. The figure compares to a price growth of just 5.1 percent in 2012. That being said, rent rates in Germany have not kept up with the increases. The F+B stats suggests that rents in new buildings perked up by a modest 1.6 percent in 2013. This is down from a rental growth of 2.6 percent in 2012. Tenants of existing flats only had to pay 0.8 percent more than they did the previous year.

In the F+B ranking of Germany's highest purchase prices, Munich took the top spot in 2013 with an average price tag of 4,580 euros per square metre, up from 4,222 euros the year before. Next in line are exclusively towns near Munich, including Garmisch-Partenkirchen, Erding, and Fürstenfeldbruck. The first cities elsewhere are found in the double-digit rankings, such as Hamburg in 11th place (3,050 euros / sqm) and Frankfurt am Main (2,840 euros / sqm).

Berlin Ranks 110th

With an average square metre price of 2,000 euros, Berlin scored place 110 in the F+B ranking of Germany's top 500 cities. Year on year, however, prices in the German capital increased by 8.3 percent. Steep price hikes for Berlin condominiums were also registered by empirica, another research institute. According to the latter, prices for pre-used condominiums have experienced an annual growth of ten percent since 2009. Mitte remains the most expensive borough in Berlin at 4,000 euros per square metres or more. The city's lowest-priced pre-used condos are available in Marzahn-Hellersdorf at a going rate of approximately 1,000 euros per square metre. There is a considerable bandwidth of 1,000 euros between the lowest and highest price almost anywhere in the city.

No End in Sight Yet

The upward trend of condominium prices is a phenomenon many German cities have in common. It is mainly explained by the housing shortage in the big cities, where keen demand coincides with a limited supply in available flats. Given the bottleneck in completions, there is no sign that prices will soften any time soon. While the low level of interest rates makes homeownership admittedly affordable, it is only a matter of time before interest rates will perk up again. Experts agree that the risk of a real estate price bubble is negligible despite the rise in prices. Indications of a forming bubble would include, for example, an upward property price trend out of sync with socio-economic factors like demographics, or excessive housing construction out of sync with actual need. Neither scenario applies in Germany, though. Even if housing development gathered speed in the metro areas, the number of completions will still fall short of demand.