Does buying property in Berlin still make sense? According to the latest edition of the Wohnkostenreport 2020 it clearly still does. The report shows that almost everywhere in Germany it remains cheaper to buy a property and live in it yourself than to rent a similar flat or house yourself. This even applies to the German metropolises, where purchase prices have risen significantly in recent years.
In the capital Berlin, owner-occupied housing costs around 35 percent less than renting. A great potential saving - especially in the long term. Buying an apartment in Berlin is particularly attractive given the currently low interest rates. Hypofriend’s guide shows you what you need to know about buying a property in Berlin and a look at the local property prices per neighbourhood.
Buying property in Berlin
Berlin is not only the largest city in Germany, but it is also characterized by its diversity and internationalism. The real estate market in Berlin is also one of the most attractive in Germany. This speaks for buying property in Berlin. Although property prices in the capital have been rising for years, they are still coming from a very low level. That is why property prices are still moderate compared on a national and European-wide level. The management consultancy PWC named Berlin the most attractive city in Europe for real estate investors in 2018.
Buying an apartment in Berlin - the list of advantages is long:
Moderate real estate prices compared to other capitals
High population growth and economic growth
Berlin is one of the Top 25 most livable cities in the world
Historically low interest rates for a mortgage
Wide range of cultural and natural attractions
Enormous increase in value of real estate
Startup Hub that attracted 6.2B euros in foreign investment in 2019
Property prices in Berlin
Some speculated falling property prices due to the Corona crisis. However, this picture has not materialised so far. Although demand was somewhat more restrained at the beginning of the pandemic, there is now no sign of great uncertainty. On the contrary: real estate represents a stable investment in times of volatile markets. After all, for real estate prices to fall, many people would have to lose their jobs and thus no longer be able to repay their loans. This is usually only the case in a deep economic crisis or recession.
The high demand for buying property in Berlin after Corona is also shown by the market report of Guthmann Estate. There it says: "The consideration of property as a better option for renting a flat is currently leading to a strong increase in interest in real estate in Berlin.”
The demand for real estate exceeds the supply. This should continue to drive property prices in Berlin upwards in the future. Another indicator of this is the vacancy rate of apartments, which is extremely low in Berlin. The latest data show a vacancy rate in Berlin of only 0.8 percent in 2018. For comparison: In 2003 – the vacancy rate was still 5.1 percent. This clearly shows the high level of immigration in Berlin. The national average currently stands at 2.8 percent vacancy.
Property prices in Berlin have been rising for years. This is due to the parameters already mentioned. Anyone who wants to buy a property in Berlin must spend a median of 4800 euros per square metre for an existing property in 2020. For new buildings, the price is significantly higher at 6480 euros per square metre. This is shown by data from Guthmann Estate. Depending on the district, property prices fluctuate greatly. In Berlin-Mitte, for example, a newly built apartment in 2018 cost more than 7250 euros per square meter on average. In Spandau, prospective buyers can find a new building in the same year for around 3500 euros.
Purchase price development in Berlin
The purchase prices for apartments in Berlin have risen dramatically in recent years. At times, no other city in the world has seen prices rise as sharply as in Berlin. Strong population growth, stable economic situation, low unemployment and a high interest of foreign investors were the reasons for this.
The purchase price development sounds extreme. It is, but it must be said that Berlin came from an extremely low level. Square metre prices of 1600 Euros are very unusual in metropolises - especially for capitals. With a median square metre price of 4030 euros, the costs are still moderate. For comparison: In Munich, the median price per square metre in 2019 was 7500 euros and in 2009 it was already just under 3000 euros. In Berlin there is still upward potential.
Purchase fees in Berlin
Anyone buying a property in Berlin shouldn't ignore the additional costs of the purchase. In addition to the property price, there are other fees for the notary, land registry, property transfer tax and the real estate agent. The amount of these costs varies from state to state.
Buyers in Berlin and Brandenburg have to dig deep into their pockets. The purchase fees in Berlin amount to 15.14 percent of the purchase price on top. The expenses are made up as follows:
Property transfer tax: 6 percent
Notary and land registry entry: 2 percent
Real estate commission: 7.14 percent
A new law will apply from 1 January. Then the broker's commission will be borne equally by buyer and seller nationwide. This has not been the case in Berlin so far. Here the buyer pays the agent alone. It remains to be seen how this will affect real estate prices.
Tip: Many newly built apartments are sold without a real estate agent and require just 8% extra fees, but beware of the uptick in the prices as some developers build the fees into the price.
Buying an apartment in Berlin
If you are thinking of buying an apartment in Berlin, the first thing you should do is calculate your potential budget. Hypofriend has developed an affordability calculator for this purpose, which tells you how much you can afford in a few minutes given your income, residence status and other factors.
If your purchase project is concrete, you should look for an optimal mortgage in Berlin. It’s important to know, that you will not necessarily get the best offer from your bank. That is why a comparison of mortgages is always worthwhile. After all, a mortgage can have a significant impact on your financial future. Accordingly, your financing should be tailor-made for you. With the wrong product you will quickly lose several thousand euros.
Are you looking for a mortgage in Berlin? Click here for a comparison of mortgages.
Hypofriend helps you find the optimal mortgage from a pool of more than 400 banks. Not only the lowest interest rate plays a role, but also the appropriate interest rate fixation, repayment and down payment. Hypofriend accompanies you throughout your home buying journey from the start of buying a property to the signature of your mortgage.
Having a mortgage broker in Berlin can also increase the chances of actually winning the bid for your dream property. The financing certificate that you get from Hypofriend shows the landlord or agent that you are capable of paying the marketed purchase price.
Necessary documents for buying property in Berlin
In order to get a mortgage in Berlin, you need to prepare several documents. These include personal documents as well as documents concerning the specific property you want to purchase.
Personal documents include
Copy of the identity card
Payslips for the last three months
Tax statement or pay slip from December
Current notice of pension
Proof of private health insurance for privately insured persons
Signed SCHUFA self-assessment
Proof of further credits, income or alimony
You need these documents from your desired property:
Extract from the land register
Declaration of partition
Dimensioned floor plan
Calculation of living space
Drafted sales contract
Exposé with pictures of the object
You can obtain the land register extract either from the land registry or the notary. The real estate agent or owner should provide you with the declaration of partition, calculation of living space and the dimensioned floor plan.
What regulations apply if you are self-employed or buy a new building, you can find here.
Buying property in Berlin-Mitte:
For an existing property in Berlin's trendy Mitte district, you have to spend an average of 5346 euros per square metre. A new building costs around 2000 euros more per square metre.
Those who live in Mitte live in the pulse of the city. In Mitte there are also a lot of tourists. Brandenburger Tor, Checkpoint Charlie or the Wall Memorial - many of Berlin's top sights are located in Mitte. Thanks to the Museum Island, there is also plenty of culture to offer. The Friedrichstraße, the Hackescher Markt or the Potsdamer Platz invite you to go shopping. On Torstraße one restaurant follows the other. Many companies also have their headquarters in Mitte. Mitte is especially popular among young people and employees that don't have a long commute to their offices.
Buying property in Friedrichshain or Kreuzberg:
A property in the Friedrichshain-Kreuzberg district costs an average of 5081 euros per square metre and a new building just under 7000 euros.
Both Friedrichshain and Kreuzberg attract free spirits. Here, everyone can live as they want to. The population is accordingly colourful, international and alternative. The Volkspark Friedrichshain, the park at Gleisdreieck, a lot of restaurants and the most famous clubs in Europe are located here. An addition is the beautiful location close to the Spree. This makes Friedrichshain and Kreuzberg very popular for families and young people alike. Especially in the last few years, both districts have become very popular.
Buying property in Neukölln:
Property prices in Neukölln are currently still below those of other inner city districts. A square metre costs 4817 euros and a thousand euros more for new buildings.
Neukölln is particularly popular among young people because of the lower rents. On Weserstraße, one bar follows another and attracts Berliners from all areas of the city. Neukölln is also characterised by its internationalism. There is hardly any other district where you will find so many different nationalities. Nowhere else in Berlin is multiculturalism so strongly lived.
Although Neukölln is not known for its green spaces, the Tempelhofer Feld and the park in the Hasenheide offer a green retreat.
Buying property in Tempelhof or Schöneberg
If you want to buy a property in Tempelhof or Schöneberg, you have to spend 5260 per square metre. A new building is given the 5541 euros only a bit more expensive.
The district is characterized by its versatility and serenity. Due to the proximity to Charlottenburg, Schöneberg has many classic cafés and restaurants, which are elegant but not out of place. Schöneberg also has a popular Gay scene. The Tempelhofer Feld, which was an airport in the past, is nowadays a huge park, which is unique because of its runway. In Tempelhof, real estate prices are even more moderate, which is why many families move here.
Buying a property in Charlottenburg or Wilmersdorf
Charlottenburg and Wilmersdorf are among the most expensive residential areas in Berlin. For a renovated old building, buyers have to pay around 5540 euros per square metre. A new building is just under 8000 euros per square meter.
Charlottenburg and Wilmersdorf are part of classic West Berlin and enchant with their magnificent old buildings and promenades. Kurfürstendamm is one of the most famous shopping streets in Germany and home to the shops of all the great designers. Charlottenburg and Wilmersdorf are not only trendy when shopping, but also when it comes to restaurants and cafés. A contrast to the bohemian places is Kantstraße, which is famous for restaurants with Asian cuisine.
Charlottenburg-Wilmersdorf also has a lot of culture to offer. The German Opera and Schloss Charlottenburg are also worth a visit.
Buying property in Steglitz or Zehlendorf
Also in the west is the district of Steglitz-Zehlendorf. Here the square metre costs 4901 euros for a renovated old building and 6501 euros for a new building.
Both in Steglitz and in Zehlendorf, quality of life is a top priority. Zehlendorf is known for its grand old villas and magnificent single-family homes. Steglitz feels like a small town in the big city. In the Schloßstraße are shops for everyday needs. Wannsee itself as well as the Große and Kleine Wannsee are also part of Steglitz and Zehlendorf and attract water sports enthusiasts. Nevertheless, the Ku'Damm can be reached in a short car or train ride.
Buying property in Spandau
Spandau is one of the less expensive districts in Berlin. An existing property here costs 3108 euros and a new building 4877 euros.
Spandau is located in the west of Berlin and borders on Wilmersdorf, Steglitz and Reinickendorf. It is characterized by a quiet and familiar atmosphere. Spandau has the largest area with the smallest number of inhabitants and accordingly many green spaces and retreats. Nevertheless, the city centre is only a 15-minute train ride away.
Buying property in Reinickendorf
Reinickendorf is located in the northwest of Berlin. Real estate buyers have to pay here 3412 euros per square meter for a renovated old building and 5257 euros per square meter for a new building.
In Reinickendorf, things are done with care and it seems almost village-like in contrast to the big city. Reinickendorf does not have a great nightlife or a lot of entertainment, and nature is not exuberant either. On the other hand, the district benefits from its proximity to Berlin and is particularly popular with commuters. Work in the hustle and bustle and live in peace. The property prices in Reinickendorf are correspondingly moderate.
Buying property in Pankow
The price per square meter for an existing property in Pankow is 5334 euros. A new building costs slightly less at 5116 euros. This is because hardly any new buildings are being built in the trendy quarter of Prenzlauer Berg due to lack of space. The existing properties are being renovated. If you want to live in a new building, you have to move out a little further.
Pankow is the second largest district in Berlin and very popular. The district Prenzlauer Berg in the south attracts residents as well as tourists. Beautiful old buildings, hip cafés, bars and cute shops characterize the streets there. Pankow stands out as a great place for families. It is clean, you meet many parents and towards Weissensee there is a lot of nature. Pankow is popular and this is also reflected in the higher property prices.
Buying property in Lichtenberg
Those who end up in the north-east of Berlin pay 3889 euros per square metre in Lichtenberg and 5113 euros for a new building.
Lichtenberg is located in the former East Berlin. The location is often considered ideal because Lichtenberg is close to the turbulent city centre and yet quiet and greener. If you are looking for entertainment, take the train. If you need relaxation, take a bike ride to the Spree at the Rummelsburger Bucht. This combination has made Lichtenberg more popular and dynamic in the recent years. Originally Lichtenberg was considered a working-class district. There is still a lot of potential and development opportunities in the district.
Buying property in Marzahn-Hellersdorf
In Marzahn and Hellersdorf, the real estate prices are the lowest in Berlin. The square metre costs here 2665 and 4274 euros for a new building.
The reputation precedes the districts Marzahn and Hellersdorf. They are often associated with Plattenbau and grey in grey. But what was true after the fall of the Berlin Wall is currently changing. Many families are moving out of the city to Marzahn or Hellersdorf. The old "Platten" are being modernised, made friendlier and offer a great view. The low rental and purchase prices and green spaces are also an advantage. Due to the strong population growth in Berlin, Marzahn Hellersdorf will also see some changes in the next few years.
Buying property in Treptow-Köpenick
The districts of Treptow and Köpenick are a green oasis in south-east Berlin. Potential buyers have to pay an average of 3448 euros for a renovated old building here. A new building costs 5100 euros per square meter.
Treptow-Köpenick offers its residents of all districts the largest proportion of forest and water bodies. Köpenick itself has a picturesque old town from the 12th century with countless cafés and restaurants. The quality of life is particularly high in the district. Treptow-Köpenick is gaining in importance as a business location. Not least because of this, many young people have moved to Treptow-Köpenick in the past five years.
Rental returns in Berlin
A property does not necessarily have to be lived in by the owner. It is also worth renting it out. Especially in cities like Berlin with a strong population growth and a low vacancy rate, this makes sense. Another advantage is the currently low mortgage interest rates. A loan has rarely been cheaper.
In Berlin, owners achieved an average rental yield of 3.6 percent in 2018. Higher returns can nowadays only be achieved on the currently volatile stock market.
However, if you buy a rented apartment in Berlin, there is one point to consider: Berlin strongly protects its tenants. Especially people who have been living in a property for a long time cannot easily be evicted by the new owner. In Berlin, tenants have a protection of ten years. This means that the new owner can only register the apartment after ten years at the earliest - other procedures like claiming own-use are not recommended. Tenants who have lived in a property for a long time pay very little rent. Only sometimes cash-offers are negotiated for tenants in case of early termination. That makes the investment uninteresting.
Buying properties in Berlin makes a lot more sense for own-use as can be seen in our Rent-or-Buy calculator.
Finding a property in Berlin
If you are specifically looking for a property in Berlin, the major real estate portals will help you. The best thing is to sign up to Hypofriend to see what you can afford. Our weekly property alerts will help find properties based on your search criteria: how large your desired property should be, how much it should cost and where it should be located. If a new property that meets your search criteria comes onto the market, you will receive a notification. This way you don't miss anything and stay up to date.
You should also fill out your own profile on the property portals and keep it up to date. This will give sellers and real estate agents a good impression of you and your financial situation.
However, many properties do not even make it onto the official market. Because especially good offers are quickly placed under the table. Real estate agents often already have a number of potential buyers on hand for new properties. Therefore it makes sense to introduce yourself to real estate agents in the desired area and leave your search criteria.
Real estate trends in Berlin
There is currently a shortage of more than 200,000 apartments in Berlin. The Guthmann Estate concludes. The calculation takes into account the difference between the number of inhabitants and the statistical household size minus the housing stock. Berlin has been lacking housing for years. In addition, the influx has increased enormously.
Due to the current rent cap in Berlin and the corona crisis, the mood on the real estate market was clouded at the beginning of 2020, as the experts at Guthmann Estate analyse. It remains to be seen how the pandemic develops in the second half and thus also the economic situation in Germany.
Nevertheless, the demand for real estate in Berlin remains high. The interest of national and international buyers continues. The low interest rates for a mortgage make buying an apartment in Berlin even more attractive.