Monday, 30 January 2017

City Comparison Berlin and The Rest of The Top 7 in Germany

One of the results of this year's annual Housing Market Report Berlin 2017, published jointly by Berlin Hyp AG and CBRE. The report is available for download.

The housing market is catching up but purchasing power not yet. In 2015, Berlin gained almost 48,000 new inhabitants due to its positive economic development and attractive quality of life, thereby continuing the development of the past few years. Since 2005, the population of the city has grown by about 270,000 inhabitants. This increase entails a growing demand in the housing market, even if the purchasing power of other large cities in Germany is still well above the Berlin average (Cologne: plus 14.6 percent, Hamburg: plus 18.6 percent, Frankfurt: plus 23.7 percent, Munich: plus 42.5 percent). Despite increased new building activity, the vacancy rate in Berlin is now 1.2 percent, which is only slightly above the Cologne (1.1 percent) and Stuttgart (0.8 percent) but already below the vacancy rate of Düsseldorf with 1.5 Percent. Accordingly, the average supply rent in 2016 rose to € 9.00 per square meter per month but is still below the supply levels of the other Top 7 cities, of which Munich is the highest value at € 15.11 per square meter per month.

"The continued development of Berlin is impressive and offers a dynamism that is unique in Germany, both at the rental and new market as well as at the purchase prices," says Henrik Baumunk, Head of Residential Services at CBRE in Germany. "Nevertheless, there is still room for improvement in Berlin with regard to rents and purchase prices, due to the progressive growth in population, while at the same time moderate new construction and due to the increasing economic power of the city", explains Baumunk.

Offer rents are twice as strong as in 2015. In 2016, the supply rents rose by an average of 5.6 percent and thus reached a dynamic level comparable to 2014, when an increase in the supply rents of 5.8 percent was observed. In contrast, in 2015 the increase was 2.3% much lower. "Growing population numbers and economic growth are putting more tension into the market," says Gero Bergmann, a member of the board of directors of Berlin Hyp. "The offer is becoming ever lower because, in the case of scarcity and price increases, the willingness to move is always decreasing."

Not only the median values of all offer rents but also the mean values of the lower and upper market segments (the cheapest and most expensive ten percent of the offers) show marked differences in the growth rates between the districts. Across all market segments, the rents offered rose most clearly in Neukölln with 17.1 percent. Marzahn-Hellersdorf recorded as the only other district a double-digit growth with 10.2 percent. At 6.70 euros per square meter and month in the median, Marzahn-Hellersdorf was still the district with the most favourable offer rents - in the lowest market segment, there were even offer rents of 5.20 euros per square meter. At EUR 11.04 per square meter, Friedrichshain-Kreuzberg showed the highest average offer with a 7.5% increase. The district with the lowest increase was Charlottenburg-Wilmersdorf with 2.7 percent. In the upper market segment, 17.46 Euro per square meter was the rent advertised in Berlin-Mitte.

These rents result in very different housing costs quotas, the ratio of the purchasing power of residents to the average warm rent of an apartment offered. The housing costs range from just over 17 percent in some quarters in Marzahn-Hellersdorf to almost 47 percent at the Hackescher Markt in the district of Mitte.

The details about the districts will be analyzed and published in our blog over the next weeks. You might want to subscribe to the blog to receive updates.

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