Berlin Real Estate Market: Autumn 2019

Rents rising moderately, growth slowing, fewer relocations.

by Peter Guthmann Published on:

Lowest rent in Marzahn-Hellersdorf, highest rent in Mitte.

In the last 12 months, the median offer rent in Berlin for new rentals was 11.45 Euro/m² net cold. The offered rents on the free residential market are about 2.5 percent higher than a year ago. This is the lowest increase in years. In three years, rents on offer rose by around 20.5 percent, in five years by 35 percent. These are the results of the September evaluation of our Berlin Market Report. This is based on the housing offers of the major real estate portals and the real estate markets of Tagesspiegel, Morgenpost and Berliner Zeitung. Offer rents of less than 10 euros are only available in Marzahn-Hellersdorf, Spandau, Reinickendorf and Lichtenberg. At the upper end the district Mitte leads the scale with over 17 Euro per square meter net cold. Moabit will be the surprise in September 2019. The small district comes in second place, with a median rent of 16.70 euros and a rate of increase of around 34 percent over the previous year. However, the local housing market in Moabit is as small as the district itself. In 12 months only just under 400 apartments were offered for rent.

Decline in rents in Wedding. Most districts have slowed down rent increases.

In a 12-month period, the rise in rents in Berlin has slowed. As of September 2019, Berlin-Wedding is the only district in negative growth. Besides Moabit, only Prenzlauer Berg has seen a double-digit increase in rents. In 14 districts, rent increases for new rentals remain below five percent, in six districts even below two percent.

Offered rents Berlin: Amount and increase in percent in 12 months

District / Quarter Median offering rent EUR/m² Percentage year-on-year change
Moabit 16.7 33.9
Prenzlauer Berg 15.4 10.2
Tempelhof 10.3 9.2
Tiergarten 14.95 7.2
Charlottenburg 14 6.7
Wilmersdorf 13.8 5.8
Mitte 17.05 5.7
Schöneberg 13.5 5.1
Köpenick 10.15 4.6
Reinickendorf Tegel 9.85 4
Treptow 10.45 3.8
Friedrichshain 14.5 3.1
Marzahn-Hellersdorf 8.4 3.1
Steglitz 10.9 3.1
Neukölln 11.15 2.2
Lichtenberg 9.95 1.6
Spandau 8.9 1.2
Kreuzberg 14.4 1
Weißensee 11.05 1
Zehlendorf 11.6 0.6
Pankow 10.3 0.4
Wedding 11.75 -1.4

Rents of five to eight euros less frequently on offer

From 2012 to the present, two fundamental trends have been observed on the Berlin residential property market. On the one hand, the number of rental offers fell by 30 percent between 2012 and 2018. Whereas in 2012, after deduction of multiple advertisements, there were still around 100,000 apartments in new rentals, in 2018 there were only around 70,000 offers. On the other hand, there is a shift in offers from the lower price segment (5.00 to 8.00 euros) to the higher price segments. In the range below 8.00 EUR/m², the supply has shrunk from over 70,000 to around 11,000 apartments. This development is set to continue in 2019. In the high-priced segment with rents exceeding 14.00 euros, around 22 percent of the offers were brought to market in 2018. 

Regulation: Market responds with rent increases

The response of the Berlin housing market to the various regulatory measures is apparent in the development of rental prices over the course of the year. After a decline in rents on offer at the turn of the year 2018/2019, they initially remained stable during the first half of the year without increases, in some cases slightly below the previous year's level. Under the influence of the rent cap ("Mietendeckel") discussion, significantly higher new contract rents have been set since mid-2019. In view of the unresolved legal situation over the next 5 years, many landlords feel compelled to make maximum use of the rents permitted under the German Civil Code (BGB). The increase in new contract rents can be measured in almost all 22 old Berlin districts. 

Post-war construction cheaper

Apartments from the years 1921 to 1949, from the Reconstruction Programme (in German "Wiederaufbauprogramm") and from the state-supported housing construction (in German "geförderter Wohnungsbau") between 1979 and 2000 offer the most affordable prices. The core value for apartments in buildings from 1900 up to 1920 is around 11 to 12 euros per square metre net cold. The Bubble Chart reveals the weak new construction activity in Berlin; many units are offered in the range up to around 11 euros, with the focus on 14 euros net cold per square metre. The volume of offers beyond the 20 euro mark shows that the luxury segment is also being served in total.

Substantial rise in purchase prices for vacant apartments

The market for freehold flats reacts according to the letting status. While the sales duration of rented apartments is increasing and prices are only moving sideways as a result of rent brake and possible rent cap, purchase prices for vacant apartments are rising sharply. The increasing shortage of residential property due to the introduction of new milieu protection areas is boosting price increases in these areas. In 12 months, prices on offer for existing properties have risen by around 14.5 percent. The increase in the new construction segment is slightly less pronounced. In September 2019, the median list price for new construction properties in Berlin was 6,360 EUR/m². 

Selling prices and influencing factors

The bird's eye view of the Berlin real estate market over the past 12 months shows how prices are influenced by year of construction, location, occupancy rate, general condition and other parameters. We have clustered the market by year of construction, size and square metre price.

Where most apartments are lacking

How can the housing deficit in Berlin be quantified? In a simple formula, the deficit corresponds to the difference between households and the number of apartments available. In a balanced housing market, one apartment per household is ideally available, apart from a small shortfall due to fluctuation reserves. If the number of reported households clearly exceeds the number of available homes, there is a shortage. One approach that appears realistic is to compare the household sizes updated according to statistical procedures since the 2011 microcensus with the housing stock. Both figures are updated by the Berlin-Brandenburg Statistical Office.

Gesamt-Defizit bei etwa 200.000 Wohnungen

Across all 22 of the old districts examined by us, Berlin lacks about 205,000 flats to cover all households with a statistical household size of approx. 1.7 persons. In two districts, Charlottenburg and Kreuzberg, the deficit amounts to more than 20 percent of the existing housing stock. According to our calculations, Charlottenburg would need about 18,000 units and Kreuzberg just under 13,700 apartments to meet current demand. Almost 25,000 apartments are needed in Neukölln. The lowest deficit is in Köpenick, followed by Marzahn-Hellersdorf. 

Berliners are gettin' together: Strongly increasing household sizes in almost all districts.

If population growth is not matched by new construction, household sizes grow. In Berlin, it can be seen that the household sizes extrapolated according to statistical methods no longer seem suitable to give a realistic picture of the city. The household size determined by us on the basis of the ratio of inhabitants to housing stock shows a minimum household size of 1.79 persons in the "old" district of Prenzlauer Berg and a maximum size of 2.12 persons in the "old" district of Wedding. The figures published by the Berlin-Brandenburg Statistical Office, with the latest update dated 31.12.2017, serve as a basis. It must be assumed that the census planned for 2021 will lead to a correction in household sizes. 

Beginning wave of suburbanization?

With about 34,450 people on net, the growth for 2018 is relatively low compared to previous years. The list is led by immigration from Poland, Romania and Bulgaria, broken down by nationality, followed by the USA and Italy. The balance within Germany is about 3,340 persons in favour of Berlin. In suburban terms Berlin lost about 12,240 people to the Brandenburg municipalities. Most of the emigration unfolds to Oberhavel, Barnim, Dahme-Spree, Märkisch Oberland and Teltow-Fläming.

Less relocation in Berlin

Within Berlin, about 285,000 people relocated in 2018. This is less than in previous years. In 2017, the relocation rate was still over 297,000, in 2016 even 313,000. The statistics are led by Neukölln with about 25,000 movements out of Neukölln and a little less moving towards Neukölln. The smallest movements are reported in Tiergarten. The migration balance is positive in all districts. 

Nationalities in Berlin

It turns out that more than 80 percent of Berlin's residents have German citizenship. Berlin is a multi-cultural metropolis with enormous integration power.

Berliners by migration background

A very diversified picture emerges when looking at the Berlin population by country of origin.