German Condominiums as Popular as Ever
More and more people in Germany are making their dream of homeownership come true. Opting either for owner-occupancy or a buy-to-let investment, they have caused the German condominium market to shatter one record after another. This is confirmed not least by the findings of the ACCENTRO Homeownership Report 2016, which quotes a transaction total of roughly 135,000 condominiums sold in major German cities last year. This translates into a one-year increase by about five percent. Yet sales revenues rose three times as fast to an impressive total of 28.5 billion euros, which is mainly explained by the steady increase in condominium prices. The average price tag for condominiums last year approximated 211,000 euros. That being said, pricing is subject to massive regional differences, and prospective buyers are well advised to shop around. Especially Berlin's housing market continues to rally, whereas other regions are starting to lag behind.
Berlin the Top Performer among Germany's Real Estate Hubs
Germany's first city, which is also home to the country's largest housing market, registered more than 24,000 apartment sales last year. The sum total implies a year-on-year increase by more than 40 percent, which is by far the fastest growth rate of any major real estate market in Germany. Moreover, Berlin is the first German metropolis that crossed the threshold of five billion euros in annual sales revenues. The impressive growth caught even experts by surprise.
Residential property owners in the city have every reason to rejoice. With an average price tag of 214,346 euros per apartment sold, Berlin also topped the mark of 200,000 euros last year for the first time. The value of homeownership is rising steadily, and nothing illustrates it better than a longer-term retrospective: If you bought a condominium five years ago, chances are that it will have appreciated by an average of around 50 percent now. Against the background of this impressive performance, more and more people are wondering how long Berlin's housing market can sustain the boom.
Berlin still has Plenty of Growth Potential
The ACCENTRO Homeownership Report also suggests there is no end to the price rally in sight. Comparing Berlin to other major cities shows that the city's residential property market has more or less matched the general market trend for years. The growth rate should actually be much faster, because Berlin retains a very bright outlook. It has not nearly exhausted its potential. For one thing, experts believe that its population will grow from over 3.5 million today to about 3.8 million by 2025. Another growth driver is the persistently low level of interest rates that has made homeownership an affordable proposition for large parts of the population.
For obvious reasons, the construction of new housing is becoming more and more important, and the ACCENTRO Homeownership Report suggests as much. The number of new-build flats sold in Berlin is now six times as high as it was in 2009. The rise in planning permits issued is another tell-tale sign. However, in order to truly ease a strained demand situation in metro areas you need political agenda-setting that will boost the development of new housing. Now is the time for the body politic to act and speed up the legislative process, because it is ultimately the only way to bring relief to Berlin's housing market.