Berlin’s Periphery Getting Seriously Expensive
Selling prices for condominiums in Berlin increased at an average of 12.0 percent in 2018, which is nearly as fast as the year before when an average growth of 12.7 percent was registered. This is the gist of the latest Housing Market Report that Berlin Hyp and CBRE publish annually.1 According to the report, the highest prices are paid in the borough of Mitte, where the median value is 5,188 euros per square metre. The highest growth rates, however, were identified not in Mitte but rather in the outskirts of the German capital. The keen demand on Berlin’s housing market has spilled over from the inner city and is reflected in skyrocketing prices on the periphery.
Increases by 20 Percent within a Year
Particularly hard-hit were those residential locations in the borough of Reinickendorf that lie north and west of Tegel Airport, which will soon be decommissioned. In these areas, the average purchase price increased by 23.3 percent, with detached homes costing nearly 3,000 euros per square metre now. The analysts identified similar growth rates of roughly one fifth during 2018 in the boroughs Spandau, west of Tegel Airport, and Marzahn-Hellersdorf on the north-east edge of the city. This goes to show that people have lately become more willing to move into well-connected areas beyond the rapid-transit circle line, as the Tagesspiegel concluded.2
The trend coincides with an outward migration into the so-called gravy belt, meaning the affluent suburbs of the Berlin metro area. For the adjacent communities in Brandenburg, the state which surrounds Berlin on all sides, the city’s brisk demographic growth has translated into a windfall of incoming residents. Its spread shows no discernible geographic preference. Potsdam and Teltow, both straddling the south-west border of the capital, benefit from the supply shortage on the housing market as much as the towns of Bernau and Oranienburg in the north. Berlin’s population increased by more than 20,000 residents in 2018. At the same time, more than 9,000 people moved to towns in Berlin’s gravy belt.3
Buying is Often Still More Affordable than Renting
From the perspective of the survey authors, however, the price growth is attributable not just to the high primary demand for homes among prospective buyers. Rather, they believe that more and more flat hunters are simply considering buying a home because of the bleak chances of success on the rental market. The persistently low level of interest rates has in many cases caused the monthly running costs within the inner-city districts of Berlin to undercut the rents of comparable flats.
But the price level is also said to be driven by the appeal of investing in residential real estate in Berlin. As the survey authors point out: While it has so far proven impossible to increase the rate of completions in any meaningful way, private individuals from inside and outside Germany keep seeking to buy flats in the city as buy-to-let investments.