Housing Market Report 2017 Shows Unchecked Price Growth for Berlin
For the purpose of their annual Berlin housing report, Berlin Hyp and CBRE evaluated 83,000 rental listings for new-build flats in 2016, and determined a mean rental growth of 5.6 percent year on year, which has pushed the net rent average up to 9.00 euros per square metre and month. According to Gero Bergmann, Member of the Management Board of Berlin Hyp, the market strain is explained both by increased incoming migration and by accelerating economic growth.
Neukölln and Marzahn-Hellersdorf the Rent Growth Leaders
The southern borough of Neukölln registered the steepest rent hikes with a record-level growth rate of 17.1 percent. Here, tenants now pay an average square-metre rent of 9.47 euros. Another borough with a double digit growth rate is Marzahn-Hellersdorf, but even with rents going up by ten percent to an average square-metre price of 6.70 euros, it remains Berlin’s cheapest borough on average. The skyrocketing rents in either borough are explained not least by the prevalence of small flats which are highly popular among tenants.
Central Borough of Mitte Remains Stable
While the “Mietspiegel” rent index table shows steady rent growth in the urban periphery, rates in Berlin’s priciest inner-city locations are flatlining after years of growth. Here, the average asking rent is 10.48 euros per square metre and month. That being said, the average square-metre rates quoted in the four single most expensive neighbourhoods – these being Hackescher Markt, Unter den Linden, Potsdamer Platz and Rosenthaler Platz – range from 13.00 to 13.80 euros.
Which of the Hip Neighbourhoods has the Highest Rent Average?
Among Berlin’s trendy districts on the rent index, Friedrichshain-Kreuzberg made the top of the list with a rent average of 11.04 euros per square metre. This implies a rent growth of 7.5 percent over prior year. Ramifications include a spillover effect into the neighbouring boroughs of Lichtenberg and Neukölln. Unsurprisingly, the highest rents in Lichtenberg are paid in the area around Stadtpark Lichtenberg because it borders on Friedrichshain and lies next to the rapid-transit circle line. The average square-metre rent in this section of Lichtenberg is 9.75 euros, well above the average of 8.49 euros paid elsewhere in the borough.
Converse Trend in some Sub-Districts
Rents in some of Berlin’s sub-districts take exception to the general upward trend, even if limited to certain neighbourhoods. Examples for a converse trend include housing on heavily frequented streets like Prinzenstrasse in Kreuzberg where rents dropped by 17 percent, Bülowbogen in Schöneberg (minus eleven percent), Johannisthaler Chaussee in Neukölln (minus o five percent), Am Treptower Park in Treptow (minus five percent) but also the boulevard Unter den Linden in Mitte (minus three percent).
Condominium Prices Rallying as Well
Berlin’s booming rental market coincides with a price hike for condominiums. Within a five-year period, the costs of homeownership have soared by 46 percent. The average square-metre price for a condominium is now at 3,289 euros. Among the boroughs, Neukölln takes the top spot again with a 92-percent growth rate. Meanwhile, there seems to be no end in sight for the boom cycle. Even 2016 made the record with a year-on-year growth of nine percent. Key reasons quoted by the Berlin Hyp and CBRE report to explain the boom in condominium sales include steep rent increases, low interest rates, and the absence of alternative investment options.