New housing construction Berlin: IW study puts annual deficit at over 8,000 apartments

The German Economic Institute (IW) in Cologne has calculated Berlin's housing demand. The result: 16,785 apartments need to be completed every year through to 2030 to absorb population growth and rising demand. In practice, only 8,744 units were built last year, barely half the required number.

This gap of over 8,000 apartments per year is tightening conditions on the Berlin apartment market. Anyone looking for a flat in Berlin already feels the shortage.

Why construction cannot keep pace

After years of stagnation and vacancy in the early 2000s, Berlin has experienced sustained population growth. The city is in high international demand, and the need for apartments is rising particularly in central locations like Mitte and up-and-coming boroughs such as Neukölln. At the same time, the designation of new building land and permit processes are not moving fast enough. Rising construction costs add further delays.

The surrounding region builds partly above demand

In Brandenburg, the picture looks different. Potsdam's deficit sits at just 3 percent. In some rural districts, construction actually exceeds what IW researchers consider necessary:

• Oder-Spree district: 560 completions, annual demand through 2030 at 142
• Havelland district: 1,068 completions, annual demand through 2030 at 429

This suggests that part of the demand not met within Berlin is spilling over into the surrounding area.

What the gap means for owners and investors

Persistent supply shortages combined with unbroken population growth push up both rents and purchase prices. For owners of existing properties, this tends to mean rising values. Investors willing to finance new housing construction will find, according to the IW study, secured demand for years to come. The question is less whether demand exists than where enough building land will become available.