Berlin Property Report
Q4 2024

Even better than before: The GUTHMANN® Intelligence Report

Dear Readers,

Berlin's real estate market is dynamic and complex. To succeed in this environment, you need reliable information and in-depth analysis. For the first time, our new report combines offer and selling price data, giving you unmatched accuracy and depth of market analysis.

Our data-driven solutions bring buyers and sellers together: Sellers achieve optimal results, buyers make informed and confident decisions.

By adding the latest transaction data to our analysis, we can now provide you with even more precise answers to your questions:

• How is the Berlin property market performing?
• What are the real prices being paid for property in Berlin?
• How are the existing, new construction and rental markets performing in Berlin's districts?

As Managing Director of Guthmann Estate GmbH, I am proud to present you with the most innovative property report for Berlin to date, reduced to relevant data and analyses for your property success. I hope you will gain valuable insights from reading this report and look forward to hearing from you.   

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. 

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. 

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.

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.

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.

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.

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.

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.