March 30th, 2017
‘Berlin bubble? Property is booming and rents are rising’ – Irish Times
‘Berlin bubble? Property is booming and rents are rising’
In an article published last Saturday entitled ‘Berlin bubble? Property is booming and rents are rising’ Irish Times Berlin correspondent Derek Scally wrote an interesting article which addressed the many questions current potential investors in Berlin and German real-estate ask themselves.
The article opens well [!] with an interview and photo of Billy Telford, the owner of Next-Estate in Berlin, ‘who has has been doing business in the booming Berlin property market since coming here in 2008′.
The article points out that Berlin is just one part of the larger German property boom, which saw total sales -of apartments, houses and land – of more than €210 billion in 2016, with rents having risen 8 % last year in main German cities, and property prices rising an average of 10 %. Compared to the year 2004, average property prices in Berlin have jumped 115 %.
In the interview, Billy Telford said that circa 80% of his clients are German and almost all are interested in living or investing in Berlin. He pointed out that there seems to be “ a political game going on here, blaming foreigners coming here with bags of money and spending it willy-nilly.” He sees three factors at play in Berlin’s boom: dropping unemployment, low interest rates, and a population spike of some 50,000 alone last year.
Regarding the question of a ‘price-bubble’ the article says that they are less likely in Berlin and Germany because of the large number of cash buyers and conservative rather than reckless borrowing. “There is also some confidence that Germany’s tradition of 10- and 15-year fixed rate mortgages will shield the German borrowers from an end to the ECB’s low interest rate policies.”
The article also mentions that ‘the bubble Cassandras, forget that while big city prices are rocketing, property prices are stagnating or declining in less economically robust regions. Which means that If markets in Berlin and Munich come down with a cold, there is less likelihood of the entire country catching the flu’.
We have written before on this blog about the enthusiasm and ongoing development of Berlin’s property market and the dynamics on the market for rental apartments, new construction and the continuous growth in purchasing prices.