Purchase price trends 2021

Black Label Properties presents the current purchase price maps for the Berlin real estate market

Once again, this year, Black Label Properties has determined its rental and purchase price maps with current reference prices for the Berlin property market. These maps show the current property prices around the underground and suburban railway stations of the entire Berlin transport network.

In order to obtain even more accurate, realistic results, this year we used the valuation tool Price Hubble to carry out our analyses. For the valuation models, Price Hubble uses machine learning and specially created algorithms to determine valuations of properties by comparing objects and calculating different sensitivities with the help of so-called “explainable artificial intelligence”.

This year, we focused primarily on the price difference (for price in €/m2) between old builds (1920) and new build flats (2020) in Berlin. This ranges between 14.3% and 14.4% in most areas of the capital. Only Alexanderplatz stands out as a location with a price difference of 35.9%. Interestingly, we also find price differences of up to 29.5% in the outskirts and immediate hinterland (C-area). Here we have assessed the question of whether rented or not in such a way that all properties have been rated as vacant.

Reason for the price difference between urban and rural are

“In the inner-city districts, prices continue to be high and rising, but they are rising much less sharply, as there is already a high price level here. In the surrounding areas, on the other hand, there has been a rapid increase, starting from significantly lower purchase prices. Despite this, it is worth buying in the surrounding area, as we expect prices to continue to rise strongly here. Especially since many companies are leaving Berlin and relocating to the surrounding area because of the better housing situation and the good infrastructure.

In addition, we see a development in Berlin in the future that will show a further increase in price differences between old and new properties.

Even though the rent cap has been ruled null and void, the “Mietpreisbremse” (rent break) applies and we have an enormously rigid regulation. Especially in the old tenancy agreements in the existing stock, there are often rents that are not in line with the market. Moreover, due to a lack of alternatives, these tenants very rarely move out, and if they do, then only when they terminate their tenancy for their own use or in exchange for compensation. In addition to the sometimes-poorer condition of the old buildings and the resulting lower rent level and without a sufficient proportion of owner-occupiers in the building, this results in lower purchase prices.

Fueled by favorable interest rates and the consistently high demand, we expect purchase prices to continue to rise overall in both new and old buildings, but with rather moderate increases in old buildings for the reasons described above”.

Achim Amann, co-managing director of Black Label Properties, draws his conclusions from the Black Label price maps.

Here you can view and download Black Label’s Berlin Price Maps

Our current real estate interview with Achim Amann and Andreas Müller, the founders and managing directors of Black Label Properties, also deals with the topic of price trends on the Berlin real estate market. If you would like to know what prices are really being paid on the market at the moment, how we determine the value or how you can actively influence the value of a property, take a look at the recording of the conversation here.

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Financing tip: Invest in rented flats now

“We advise investors to invest in long-term rented flats. The reason is the considerable price difference of about 30 percent between vacant and rented flats. As an investment, these flats are much cheaper. They are let to long-term tenants who still have up to ten years’ notice protection against owner occupation.

The large price gap between vacant and rented flats results from the fact that there are significantly fewer rental offers than last year, so rents continue to rise. Flats that are subject to the “Mietpreisbremse” (rent break) when they are re-let rarely come onto the open market. They are either sold at a profit or re-rented as shared flats and/or furnished or traded on the “black market”. The negative effects of the regulations on rents have made the search for an affordable free rental flat much more difficult,” recommends Andreas Müller.

Where is the trend heading this year and where can further price increases be expected?

Rents will continue to converge in Berlin. “Especially in districts like Köpenick and Reinickendorf there is still a lot of movement on the market – here we expect price increases of 5-10 per cent this year,” estimates Achim Amann. “However, overall rents will not rise significantly across the city, as the load limit for tenants has been reached. So, larger and smaller investors both should be prepared for an overall sideways trend in rents.”

A striking trend can be observed among young families living in Berlin. They are turning their backs on Berlin by selling their too-small property or giving up their rental flats. They are drawn to the surrounding areas of Berlin, where it is still much cheaper to buy or rent. “We were also sorry to see again this year that many investors and construction companies are turning away from Berlin and prefer to build in other communities. This means that less new housing is being built for Berliners.

In our view, the main reasons for this are the overly drastic regulations in the housing market, such as the milieu protection and the announced ban on conversion, the special political situation in Berlin, as well as the expropriation issue and, in particular, the anti-construction sentiment of many Berlin building authorities towards developers and investors. Therefore, we advise Berliners to send a signal in this year’s state elections and replace the coalition that has been unsuccessful in housing policy for many years, in order to finally bring new momentum into Berlin’s dusty offices. When it comes to housing policy, things can only get better for Berliners,” says Achim Amann.

There for you personally:

Achim Amann

Achim Amann

Telephone: +49 30 – 921 43 046
Email: aa@blp-immobilien.com

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