IS BUYING A PROPERTY IN BERLIN REALISTIC AT THE MOMENT?

The real estate market is currently characterized by rising interest rates and high property prices. In view of this situation, many prospective property buyers are asking themselves whether it is still possible to afford a property at all. Rising interest rates are making it more expensive to finance property, while high property prices are increasing the cost of buying. We show you what income you can currently afford to buy a property in Berlin.

Real estate prices in Berlin

The average price per square meter for a condominium in Berlin is 5,771 euros. This means that 100 m² costs around 577,100 euros – excluding incidental purchase costs. The price of a house is even higher: a property with 100 m² costs an average of 639,500 euros. Added to this are the costs for land transfer tax, which is 6% in Berlin. The notary and land register entries add around 2%. This means that there are already 8% in incidental purchase costs – without the professional support of an estate agent. For the average purchase price of a house in Berlin, this means: 51,160 euros are added to the property price.

As a rule, prospective property buyers contribute around 20% equity. More and more banks are demanding this in view of rising interest rates. In our example calculation, you therefore need to have saved up 138,132 euros. You can finance the remaining 552,528 euros with a loan. The average interest rate is currently 4%. The monthly installment would therefore be just under 2,916 euros.

Experts advise that no more than a third of household income should be used for rent or paying off a loan. In our example calculation, a net income of 8,748 euros would therefore be necessary. The gross amount varies depending on the tax bracket and living circumstances. For a single person with no children, no church affiliation and tax class 1, the required gross salary is approx. 15,429.79 euros per month.

How realistic is a property purchase?

Based on our sample calculation, buying a property sounds rather unrealistic – doesn’t it? Even if such figures are off-putting at first, there are still ways to make your dream of buying a property come true.

One option is to look for cheaper locations. Does your property have to be in the center of Berlin or would a peripheral area also be attractive? In some regions, property prices can be considerably lower than in sought-after urban areas.

You should also check your own finances carefully: increasing your own capital can help to reduce costs. You should also compare various offers from banks and credit institutions in order to obtain favorable financing conditions.  Government subsidy programs can also support you with loans with low interest rates or grants.

Another option is to hire an experienced real estate agent. They will help you with a targeted search for suitable properties and support you with price negotiations.

Are you interested in a property but are unsure about the current market situation? We at Victor Investment will be happy to answer your questions – get in touch with us!