Berlin asking rents rise 2.1% in a quarter, fastest of big cities

Rents for advertised flats in Berlin rose by 2.1 per cent in the third quarter compared with the previous quarter, the largest increase among Germany’s eight biggest cities, according to the Kiel Institut für Weltwirtschaft (Kiel Institute for the World Economy). The Berliner Morgenpost reports that rents are climbing faster across Germany’s large cities, and the pace is picking up again.

What happened

The Kiel Institut publishes a rent index called Greix, short for German Real Estate Index. Its latest figures show that Angebotsmieten (asking rents, the prices landlords put in listings for available flats) rose by 1.2 per cent nationally in the third quarter compared with the second. The figures are nominal, which means they are not adjusted for inflation. According to the institute, this was the strongest quarterly rise since the first quarter of last year. In the second quarter, asking rents had risen by 0.8 per cent.

Among the eight largest German cities, Berlin and Düsseldorf saw the biggest quarterly increases, at 2.1 per cent and 2 per cent respectively.

Compared with the same period a year earlier, rents from July to September were 3.7 per cent higher, again without adjusting for inflation. The Berliner Morgenpost explains that the year-on-year comparison removes seasonal effects on the housing market, which the quarter-on-quarter comparison does not.

Jonas Zdrzalek, a housing market expert at the Kiel Institut, said that rent dynamics are gaining momentum again, if only slightly. Prices rose comparatively strongly for Bestandswohnungen, meaning flats in existing buildings that have been lived in before. These tend to be cheaper than flats in new builds.

Over the year, Hamburg recorded the largest increase of the big cities, at 6.7 per cent. Outside the eight largest cities, rents rose most sharply in Bochum, Augsburg and Mannheim, with increases between 6.3 and 5 per cent. The report did not give reasons for the trend.

What it means for you

The figures describe what landlords are asking for flats on the market, not what existing tenants already pay under their current contracts. If you are searching for a flat in Berlin, they are the most relevant to you. They suggest that listings in the city became noticeably more expensive over the summer, with Berlin rising faster than any other major German city in that quarter.

The rise in older flats deserves attention. Many newcomers to Berlin look at Altbau and other existing housing because it has traditionally cost less than new builds. According to the Kiel Institut, this part of the market saw comparatively strong price growth, so it is worth checking current listings rather than relying on older price expectations when you set a budget.

If you are planning a move to Berlin, the national year-on-year figure of 3.7 per cent and the quarterly figure of 2.1 per cent for Berlin give a rough sense of direction. They do not tell you what any individual flat should cost, and they are not inflation-adjusted, so real costs relative to wages may look different.

It also helps to know how the index is built. The Kiel Institut says it analyses rents in 37 cities and regions, including the 30 most populous cities in Germany. The Greix draws on property market data from more than 100 sources. It is therefore mainly a picture of rents in large cities and may say less about smaller towns or rural areas.

What to watch next

The key question is whether the acceleration Zdrzalek described continues into the next quarter, and whether Berlin stays at the top of the quarterly table among the largest cities. Watch for the next Greix release from the Kiel Institut. Neither the institute nor the Berliner Morgenpost gave reasons for the latest rise, so any explanation of what is driving prices, especially for older flats, will also be worth following.

Source: Berliner Morgenpost