Market Analysis
Market analysis Q1 2015
2015 Study: Buying Cheaper Than Renting in Berlin
A study by research institute empirica found that buying a resale apartment was cheaper than renting in almost all of Berlin. Only the borough of Mitte was an exception.
Peter Guthmann
Research institute empirica analyzed listing data from the first quarter of 2015 on behalf of LBS. The result: in eleven of Berlin's twelve boroughs, buying a resale apartment was financially cheaper than renting a comparable property. The only exception was Mitte, where purchase prices had already reached a level that eliminated the cost advantage over renting.
Lichtenberg offered the biggest savings
The advantage was most pronounced in Lichtenberg. Buyers of an average resale apartment there, priced at around 105,000 euros, saved roughly 181 euros per month compared to renting. On top of that, the buyer ends up owning the property, a form of wealth building that renters miss out on entirely.
Other boroughs also showed monthly savings, though the amounts varied. In 2015, districts like Neukoelln and the eastern parts of the city offered particularly affordable entry points.
How the calculation worked
LBS used a standardized model: 25 percent equity, an annual cost of five percent of the purchase price (two percent interest, three percent repayment). The resulting monthly installment was then compared to the net cold rent for a similar apartment. The low interest rates of 2015 tipped the balance: they made buying accessible to a broader group of purchasers than during high-interest periods.
Low interest rates as the driving force
The findings reflected the European Central Bank's monetary policy. Favorable financing conditions pushed monthly costs for buyers down, while Berlin rents continued to rise. This divergent market trend widened the gap between rental costs and mortgage payments, in favor of buyers.
What this meant for buyers and investors
The study gave a clear signal in 2015: purchasing an apartment in Berlin deserved serious consideration. Monthly savings improved cash flow, and repayments built equity. Those who bought in up-and-coming locations at the time benefited from subsequent price appreciation. For investment buyers, the combination of low financing costs and rising rents was especially compelling.