Even better than before: The GUTHMANN® Intelligence Report
Dear readers.
The dynamics of Berlin's real estate market are shaped by a variety of factors: interest rate policies, economic conditions, and demographic trends define supply and demand. Berlin's market remains both challenging and full of opportunities, especially due to its political and regulatory environment.
For 2025, we expect price stabilization with moderate increases. Following a slight decline in 2024 of -0.70 %, signs of recovery are already evident in certain districts and locations. Demand for housing remains strong among both buyers and renters. While the average price for existing properties currently stands at €5,010 per square meter, new developments are reaching approximately €7,900 per square meter. In the rental segment, demand pressure continues to grow against a backdrop of scarcity, pushing advertised rents up by 14.20 % year-on-year. The growing divergence between the offer market and the existing market is analyzed further below.
The upcoming Bundestag election on February 23, 2025, will have an impact on Berlin's real estate market, depending on the political priorities of the newly elected government. In the fast-paced election campaign, housing policy plays a significant role, with different parties presenting their visions. The Left Party is advocating for a six-year rent freeze and a legal ban on rent increases. The CDU (Christian Democrats) calls for tax relief for heirs, particularly in the inheritance of family homes, to reduce the financial burden during generational transitions. The SPD (Social Democrats) has announced measures aimed at creating affordable housing, including the introduction of a new housing cooperatives policy to promote social housing construction. Additionally, the SPD plans to tighten rent controls and further limit rent increases following renovations.
The implementation of any measures will depend on the election outcome and subsequent coalition negotiations. Whatever decisions are made at the federal level will directly impact Germany's largest rental market—Berlin. As a market participant, it’s essential to closely monitor developments and prepare for potential changes.
Beyond legislation, our focus remains on the market itself. Regardless of the coalition or housing policies that 2025 may bring, our analyses provide the certainty you might not find in politics.
With the expansion of our analysis to include current transaction data, we can now provide even more precise answers to your key questions:
- How is Berlin’s real estate market developing, both citywide and on a micro level?
- What real prices can you achieve for your properties in Berlin?
- Where are the most promising investment hotspots for your portfolio?
With GUTHMANN®, your property sale reaches a vast national and international audience. Trust Berlin's data-driven real estate agents.
Sincerely,
Peter Guthmann
Development and status quo
The rise in property prices in Berlin in the early 2010s is the result of a complex constellation of structural and economic factors. Berlin has been experiencing sustained growth since at least the end of the first decade of the 2000s.
The attractiveness of the German capital and the resulting national and international investor interest, combined with comparatively low property prices, led to a run on Berlin's housing and real estate market. Continued population growth, mainly driven by immigration, fuelled demand for housing. Urbanisation trends reinforced this effect. At the same time, the European Central Bank's expansionary monetary policy provided favourable financing conditions through low interest rates, which increased the attractiveness of real estate as an asset class.
At the same time, supply fell short of rising demand. The availability of building land and lengthy approval procedures for residential construction led to a structural bottleneck, further pushing up prices. In many neighbourhoods, regulatory processes also contributed to a further shortage.
The price increase in the 2010s is the result of a combination of increased attractiveness, population growth, favourable financing conditions, supply bottlenecks and increased investor demand. This development has had a lasting impact on Berlin, changing the social structure of many neighbourhoods.
2024 - KPI
Sales transactions total | Average closing price EUR/m² | Difference to previous year % | |
---|---|---|---|
Existing properties (Stock portfolio) |
8,560 | 5,010 | -2% |
New constructions | 1,105 | 7,950 | +1% |
Small margin between offer and closing price
The difference between the asking price and the notarised closing price is currently around 6% and rising slightly after a temporary convergence. This reflects the sellers optimism, who are less cautious about entering the market in view of falling interest rates for loans. At the same time, it is clear that buyers are still acting cautiously and taking advantage of the scope for negotiation. The spread between asking and closing prices varies widely based on property type, condition and location.
From insider tip to knowledge metropolis
After the first phase of its transformation from an isolated city ruled by the Berlin Wall to a hip cultural metropolis, the direction for the coming decades of the German capital is becoming clear. Unlike specialised regions such as Silicon Valley or industry-dependent hubs such as 'car cities' or purely academic regions, Berlin brings together players from all sectors. Pharmaceuticals, consulting, fashion, the digital economy, literature, art and culture. Berlin's transformation is broad-based and therefore sustainable and innovative. Not surprisingly, Berlin's universities are among the world's most sought-after places to study and do research, generating further demand.
Development of real notarised purchase prices 2010 to date
Covid and Ukraine
The COVID-19 pandemic resulted in a rise in property prices in Berlin, fuelled by low interest rates and an increased focus on quality of living and working from home. The average price per square metre rose from €4,350/m² at the start of 2020 to €4,980/m² at the start of 2021. The war in Ukraine starting 2022 increased uncertainty, pushed up inflation and led to a shift in interest rates. Rising financing costs curbed demand, resulting in a slight decline in existing prices per square metre from €5,360/m² in 2023 to the current level of €5,010/m² in the last quarter of 2024. The downward trend has clearly come to a halt in both the new-build and existing property segments.
Decline in purchases since 2015 - stabilisation in new construction, uncertainty in existing properties
The number of notarised sales has been declining since 2015 and stood at around 9,700 sales in the last quarter of 2024, of which around 8,600 were for existing properties and around 1,100 for new builds. In both segments, the slump in sales with the start of the war in Ukraine and the resulting inflation and interest rate problems is very clear. Sales of new apartments have recently stabilised, while the outlook for the existing building segment is still unclear.
Transactions Berlin 2024
Local property markets in Berlin
The main activity in the existing property market in Berlin is concentrated inside the S-Bahn rail center, while the new construction segment with space-intensive volume projects is predominantly decentralised.
Fig. Transactions for existing apartments 2024
Fig. Transactions new-build apartments 2024
Average purchase prices
Property prices in Berlin are highly location-dependent and vary significantly within Macro, Midi and Micro locations. The administrative districts are followed by the old districts, i.e. the neighbourhoods. In these districts, we record prices in detail – from the district level down to the block level. Our analyses are based on data from the Berlin Property Appraisal Committee. The average values cover all apartment types and purchase cases and provide a location analysis that does not replace an individual valuation. The GUTHMANN® valuation tool and the experienced Guthmann Estate team are at your disposal for a valuation specifically tailored to your property, flat or apartment building.
Existing Properties
In terms of districts, there is a price corridor of around 5,600 to 5,800 euros in the segment of existing flats from the south-west to the centre to the north of Berlin. An average flat in these districts measures between 70 and 76 square metres and costs on average between 420,000 and 445,000 euros. The cheapest flats are located in Spandau.
Average purchase prices for existing apartments
New builds
Newly built apartments in central city locations are no longer available for less than EUR 10,000/m² on average. In special micro-locations, prices can also be well above the average. The highest prices per square metre in 2024 are found in the area around Oranienburger Strasse, Savignyplatz and Ludwigkirchplatz.
Fig. Average purchase prices for new apartments
Price development over 1, 3, 5 and 10 years
Property sales in Germany can be tax-free under certain conditions, the most important factors being the holding period and the use of the property. A holding period of ten years or more allows owners to realise gains from the sale of private property free of income tax, as long as the property is not part of their business assets. Own use of the property can also lead to tax exemption, regardless of the holding period, if the property has been used as a residence in the year of sale and the two previous years.
The periods of 1, 3, 5 and 10 years are therefore of particular interest. The one-year period provides a short-term analysis of value and gives an insight into the volatility of the market. Three and five years provide a medium-term perspective, showing how the property will perform over an average holding period. The ten-year period represents the tax-relevant limit and gives investors an indication of the tax-optimised holding period.
Percentage development of purchase prices in Berlin districts over 10, 5, 3, 1 years
Apartment Buildings Berlin 2024
After a period of consolidation, Berlin's apartment building market shows positive developments in 2024. In the third quarter of 2024, the market recorded a significant increase in transactions and offers. Experienced family offices and private investors are showing increased interest, driven by attractive purchase price factors, rising yields and an interesting supply. The number of transactions has picked up after several quarters of decline. Up to October 2024, 404 sales of residential and commercial properties have been registered. The average purchase price factor is around 23.3.
While monetary turnover is increasing, floor space turnover continues to decline. This suggests that investors are increasingly focusing on properties in central locations, which are considered stable in value despite higher prices.
Rents in Berlin are rising steadily, leading to improved returns for investors. This mechanism compensates for the rise in interest rates and prevents further erosion of purchase prices. Overall, the Berlin apartment building market is showing signs of stabilisation with positive trends in 2024.
Fig. Apartment Building Market Berlin KPIs
Investment focuses
Which districts have buyers focused on over the past five years? The following table provides an overview.
Ihr direkter Draht zu uns
Rental Housing Market Berlin
Berlin's rental market is influenced by factors such as immigration, population growth and housing policy measures. Over the past 20 years, Berlin has undergone significant changes as a result of rising demand and falling vacancy rates. Many neighbourhoods have developed into districts that are now known for their high quality of life, diversity and popularity.
With the focus on regulating existing rents rather than new construction, more and more rental housing has been taken off the market. This trend began with neighbourhood protection and culminated with the rent cap, which, despite its short duration, significantly reduced the supply of rental housing and created great uncertainty for many landlords. The current regulations also discourage new construction and restrict free pricing, which has contributed to the release of large housing stocks in other markets. With existing rents rising only very slowly, there is no incentive to downsize, so large apartments are increasingly occupied by small households. As it is difficult for many owners to rent out flats indefinitely in an economically viable way, many flats are sold or - entirely legally - rented out on a temporary basis.
The result of the GWZ (building and housing census) of the 2022 census shows how low existing rents in Berlin actually are.
Fig. Average rents per square metre according to the 2022 census
Average ‘absolute’ rents
At least as important as the rents per square metre are the average total net rents, which were also surveyed in the 2022 census and are shown here on a map. Interestingly, in addition to the very central areas of the city centre, Berlin's peripheral districts are also divided into higher rent ranges.
Fig. Average absolute net cold rents
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Trend
The most frequently asked question we receive is about the future development of the real estate market. Our analyses, which for the first time are based solely on transaction data, reflect the market's supply and demand situation with minimal time lag.
For the coming quarters, we can confidently expect a final stabilization of purchase prices. However, the development within segments may be more or less driven by interest rates. The market for vacant apartments has already picked up significantly and is close to pre-war levels in terms of price and transaction volume. Rented apartments as investments are more strongly influenced by the interest rate environment. Especially in this segment, a significant recovery is expected for 2025, as increased rents and slowly declining construction interest rates create an attractive investment environment.
Multi-family houses, particularly Berlin's rental buildings, have recently experienced a decline in both quantity, price, and quality factors. Due to the same reasons as for rented apartments, the price trend will reverse very quickly and point upwards.
Regardless of the segment you are interested in, you can continue to rely on our expertise, our analyses, our buyer network, and our international reputation.
District Reports Berlin
This report was last updated on 13.12.2024 .
Disclaimer
The Guthmann Market Report is a semi-automated report about the property market in Berlin. All information has been carefully researched and is given to the best of our knowledge and belief. We assume no liability for completeness, deviations, changes and errors. Our report does not represent an investment recommendation.
Sources
Amt für Statistik Berlin-Brandenburg: Einwohnerregisterstatistik (Bewegungsdaten), Fortschreibung des Wohngebäude- und Wohnungsbestandes, Ergebnisse des Haushaltegenerierungsverfahren KOSIS-HHGen, Baufertigstellungen. IMV GmbH: Rohdaten Preise und Mieten. Senatsverwaltung für Stadtentwicklung und Wohnen: Umwandlungsdaten (2018), Geoportal Berlin (FIS-Broker). Immobilienverband Deutschland IVD (2018/2019): Immobilienpreisservice 2018/2019.
Methodology
Housing deficit (Treemap): The Statistics Office updates the household data based on the 2011 micro-census. Determination of household count and statistical household size via household generation procedures (KOSIS). We calculate the real household size / housing deficits via the ratio number of inhabitants to number of apartments.
Purchase prices and rents (charts and reports): Calculation of the median on the basis of raw data, own visualization.
Migrations: Aggregation and visualization based on transaction data.