The awaited upswing in Berlin’s housing market is beginning to take shape, according to a research report by GSW and Jones Lang LaSalle. The report says that the price trend for new rental contracts in now pointing up in eight of Berlin’s 12 districts. And purchase prices are going up too in most parts of the city.
The awaited upswing in Berlin’s housing market is beginning to take shape, according to a research report by GSW and Jones Lang LaSalle. The report says that the price trend for new rental contracts in now pointing up in eight of Berlin’s 12 districts. And purchase prices are going up too in most parts of the city.
'There are many different reasons for this,' says GSW chairman Thomas Zinnocker. "The lively upswing and the more relaxed labour market are fuelling demand, but more importantly in the long term is the growing number of households.'
However, JLL believes that supply is not keeping up with the pace of development. 'The number of newly-built multi-storey houses is at a level you could only call laughable for such a big city,' says Andrew Groom, head of the German valuation advisory department at JLL. 'And because of the increase in construction costs, it is not going to get back to normal that soon. At the same time, a far larger number of flats will disappear from the housing stock.'
A slight decline in prices for new rental contracts was seen in Germany in just three of the 12 city districts over the last 12 months. In five districts there was consolidation, while four districts record an average price increase in new rental contracts of up to 50% per m2 per month.
The improved labour market in Germany has had an impact on Berlin’s housing market, Zinnocker says. "When jobs are safer and incomes go up, people are more willing to make changes, such as moving into a bigger flat or a more comfortable one.'
At the same time, the number of households in Berlin is growing. The average size of household is shrinking, from just under 1.8 persons today to an estimated 1.6 in 2015. This means that there will be additional demand of around 235,000 flats.