Market Analysis
Berlin rent vs buy comparison 2016
Berlin gross rents fall slightly. IW study finds buying cheaper than renting
Gross rents in Berlin fell 0.3 percent in March 2016. Falling ancillary costs offset the rise in net cold rents. An IW study finds buying is cheaper than renting when adjusted for purchasing power.
Peter Guthmann
On Berlin's housing market, falling ancillary costs currently outweigh rent increases. According to the Statistical Office of Berlin-Brandenburg, residential rents including ancillary costs fell by 0.3 percent in March compared to the same month a year earlier. Bottom line: Berlin tenants are saving money.
The numbers in detail
Net cold rents rose by just 0.2 percent year on year in March. Ancillary costs fell by 4.0 percent. For over a year now, ancillary costs in Berlin have been declining, initially due to a court-ordered reduction in water charges, later because of falling energy prices globally. That gross rents are actually declining as a result was new, however.
The trend already appears to be levelling off. Heating oil rose 11 percent month on month. Overall, ancillary costs showed no further change versus February, while net cold rents edged up 0.1 percent.
Buying cheaper than renting
A study published in late March by the Cologne Institute for Economic Research (IW) finds that buying an apartment in Berlin is more attractive than renting, relative to purchasing power. The institute compared rents and purchase prices against local purchasing power.
The result: in 2010, Berliners spent 133.3 percent of the national average (adjusted for purchasing power) on net cold rent. By 2015, that had risen to 138.7 percent. In relative terms, renting became more expensive.
For owner-occupiers the picture was the opposite. Owner-occupier costs relative to purchasing power fell in Berlin from 112.9 to 91.0 percent. Low financing costs are the main driver. The IW notes, however, that banks typically require 50,000 euros or more in equity before approving a mortgage.
Whether in established locations like Mitte or up-and-coming boroughs like Neukoelln, the gap between renting and buying costs is widening in favour of buyers of apartments in Berlin. The market development shows: those who can put up the equity are better off buying.