Factors affecting rental prices in Berlin
The European property market has felt the negative impact of rising interest rates. Despite the easing of monetary policy, the recovery has been relatively slow. Germany is no exception. Rental prices in Berlin are growing rapidly.
CBRE and Berlin Hyp Bank, have analysed the capital’s property market, focusing on the rental sector, where prices are rising regularly. According to the report, the Berlin rental price per square metre is around €13.6. It is important to note that this amount does not include utilities, the cost of which has also increased.
The analysts note that the pace of price increases in the capital is uneven and depends on location. The highest price increases were recorded in the following districts:
– prices in Neukölln rose by 23.5%;
– landlords in Friedrichshain-Kreuzberg raised prices by just over 23%;
– in Spandau, prices rose by around 19%;
– rents in Lichtenberg also rose by almost 19%;
– in Mitte by 18.5%.
Experts point to the increase in construction costs among the reasons for the sharp rise in prices in the sector. The increase in the number of migrants to the capital also stimulates the growth of rental prices. High inflation and rising interest rates have also played an essential role in the market situation. The latter makes property unaffordable for a large number of potential buyers. As a result, they are obliged to rent apartments or houses in Berlin. This situation leads to increased demand for local property.
Trends in the Berlin housing market
Destatis experts have provided a general overview of the German housing market. At the end of 2002, they recorded the most significant fall in housing prices in recent years. In the fourth quarter, prices fell by more than 7% compared with the end of 2022. Looking at the trends over the two years, the situation is extremely difficult. The total decline was 8.4%.
Falling prices are a positive signal for buyers. They can buy houses cheaply. Moreover, sellers are prepared to offer discounts for fear of prices falling even further. And given the rent growth, buying can be seen as generating income.
However, investors are still not rushing into the German property market. Information from JLL shows a decline in activity in almost all sectors. In the first quarter of 2024, property sales fell by 19%. We are talking about offices, warehouses, and residential properties. Overall, the total value of sales transactions in the period was EUR 6.3 billion. This is the lowest figure since 2011.