After a short-term fall in prices, the Berlin housing market has moved to recovery

Germany’s decade-long boom in home prices, which ended last year after the European Central Bank decided to introduce a series of interest rate hikes, has sent mortgage rates doubling and sometimes even tripling.

This event forced many players out of the real estate market, and also caused property prices to fall across Germany.

However, according to the recent data gathered by real estate advertising agency Immobilien Scout, the cost of buying an apartment in a new building in Berlin rose 0.8 percent last quarter, partly offsetting a sharp drop recorded in the previous three-month period. Apparently, the density of the housing market in Berlin made the price growth halt only temporarily, and this dynamic is changing already. Overall, a square meter of living space has risen in price by about 100% compared to the period of seven years ago.

According to Immobilien Scout, despite the fact that prices for second-hand apartments in Berlin have fallen for the second quarter in a row, this drop was only 0.3 percent compared to 5.3% in the previous quarter. This likely indicates that the downtrend is about to change for the better.

Berlin has been facing a serious mismatch between supply and demand in the rental property market for a long time. According to official figures, a staggering number of 26,000 people in Berlin did not have a fixed address in one way or another at the beginning of last year. Some researchers estimate that the German capital requires more than 100,000 apartments to fully meet the demand for housing.

The situation with the lack of supply for housing has led to an increase in rents, which, in turn, has pushed up the maintenance prices for buildings. With inflation recently hitting record highs, landlords are tempted to defy Berlin’s strict price control and keep pushing up rents.

Other industry sources also indicate that the German residential real estate market has already returned to a previous era of sustained price increases. According to the Europace House Price Indicator, the market showed a monthly increase in February, breaking a series of seven consecutive falls since July last year.