If you know how to negotiate, you know how to win – even when the market has supposedly turned. While some observers are currently advising you to think twice about selling your home, condo or apartment building in Berlin, our experts know that now is the perfect time to capitalize on your real estate In Berlin. Especially if you have owned your property for at least 10 years or have been using it yourself for 2–3 years. Despite inflation and the buyer’s market, you now have a great opportunity to get the most out of it. How? Let us explain and do everything we can to help you achieve a fantastic result!

The most important facts at glance:

• Interest rates are rising, real estate prices are falling – but not everywhere:
• In Berlin, prices increased by around 30% from 2020 to 2023.
• Price inflation seems to be flattening out at the moment, as the market returns to the long-term trend.
• Nevertheless, supply is tight; the case for strong prices is good.
• Anyone who has held their property for 10+ years should consider selling. Now.

The market: challenging, but not hopeless

The headlines are all telling the same story: The German real estate market is stagnating. In many regions, prices have even fallen – as has demand. High mortgage rates are making it difficult for potential buyers to finance their purchases. People are hesitating; wanting to pay less.

The root of this stagnation lies, as we all know, in the current geostrategic crisis. Scarce – and therefore expensive – energy has fueled inflation. And central banks have raised key interest rates in response. By doing so, thy hope to reduce the general purchasing power of borrowed capital and put a stop to the general rise in prices.

This is a good thing for all consumers, but a bad thing for anyone who wants or has to sell something. However, the scenario does not apply everywhere: Berlin’s real estate market in particular is stronger than this crisis.

Downturn? That might be true elsewhere, but in Berlin, you can still win – for now.

Alarm bells are ringing, but they don’t provide much advice. Thanks to its conservative financing culture, the German real estate market is deemed robust by experts, and it is highly unlikely that a real estate bubble will form, let alone burst. Buying is still an attractive proposition – and well-informed buyers know that.

Interest rates may still be rising, but it looks as if a plateau has been reached – especially given the Fed’s most recent moves. In any case, such increases always have a delayed effect. For example, the ECB has just raised its key interest rate to 3.75%; at the same time, the mortgage interest rate is below that: at around 3.4%.

For Berlin, this means that the unfavorable trend is likely to continue for a while. But the development contrasts with the German average: While prices recently fell more sharply nationwide than at any time in the last 16 years, they continued to rise in the capital – albeit it at a slower pace. A decline is unlikely, but a further reduction in growth rates is certainly to be expected. This means that anyone who wants to sell should do so sooner rather than later.

Berlin price trend: scarcity of supply trumps a buyers’ market

While Berlin was widely regarded as a seller’s market until very recently, many are now talking about a reversal: a more favorable market for buyers. But this is only part of the story. Of course, the price increases over the last 10 years have been enormous: a doubling, in some districts even a tripling. We won’t be seeing more of the same. From 2022 to 2023, average real estate prices increased by only 5%, although they still managed a 30% increase over the last three years.

Events are returning to normal; a kind of equilibrium is taking hold. This is because the declining appetite for investment is being countered by a persistent shortage of new housing. While migration rates have picked up again after the pandemic, the number of new apartment approvals has been falling for years: only 73% of housing needs are currently met. And this shortage is driving demand.

Perhaps some buyers need to be made aware of this. One thing is certain: anyone looking to buy residential property in Berlin will soon realize that prices have not fallen. And anyone who wants to sell should make use of this knowledge!

The 10-year holding period: who can sell at a profit now.

In order to take full advantage of the increased value of your property when you sell it, you’ll need to comply with e 10-year, tax-free holding period, which was introduced to discourage speculation with residential assets. Anyone who sells their residential property before 10 years have elapsed will have to pay taxes on capital gains. The exact amount will depend on how much your property’s value has increased and your individual income tax rate.

But there are two exceptions: If you have lived in the property yourself since you acquired it, you can sell it tax-free at any time. The same applies to owner-occupiers who have lived in their property in at least three calendar years before they sell it. In the best case, this can be as little as 14 months (if purchased in December of year one, the property can be sold in February of year three). If you are in this situation now, feel free to rejoice – and consider making a lucrative capital gain on your property.

Divestment scenarios: who should sell?

Real estate tends to be a long-term, secure investment. However, holding on to it does not always make sense. Given that price rises are likely to be slower over the next few years, there are three situations in which you should seriously consider selling at the present time:

1. LIVING INSTEAD OF WAITING
You only live once. But real estate is an illiquid asset. Owners can only unlock its value by selling it. If you have plans, if you want to treat yourself – now is a good time to take advantage of the above-average profits you have amassed over the last 10–15 years.

2. SUPPORTING CHILDREN & GRANDCHILDREN
The same applies to anyone who holds real estate to support their children and grandchildren. Maybe they have their own dreams now, important needs that they can only fulfill if the funds are in place. And a gift of money after the sale of real estate can, after all, be tax-free up to EUR 400,000. In contrast to inheritance tax, this tax-free amount can be used again after 10 years. The future is ready and waiting.

3. INCREASING PROFIT POTENTIAL
If you want to get more out of your locked-up assets in the short and medium term, you would be well advised to reallocate them. Selling your residential property now and investing in assets that will generate even higher returns, such as stocks, can be a smart move. Depending on the location of the property, it may also be worth investing in other Berlin properties with higher appreciation potential.

Getting the best out of a sale – with your real estate partners

Yes, there have been easier times to sell, but not necessarily more lucrative. And maximizing the value of your property is an art we have mastered. Especially in times of crisis, best-in-class real estate market expertise and personal commitment really pay off. Together with our highly skilled professionals, knowledge of the nuances of the market, and persuasive arguments for buyers, we can get the best out of your property.

Aspiration is what connects us. Let us advise you with confidence! We are here for you.

Our experts will be happy to assist you. For general questions or individual consultations, you can reach us at any time at +49 (0) 30 887 742 50 or service@david-borck.de.

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David Borck Immobiliengesellschaft

Schlüterstraße 45 | 10707 Berlin | service@david-borck.de
Telefon +49 (0)30 887 742 50 | Telefax +49 (0)30 887 742 525