Development of the Berlin Real Estate Market in Q2 2025

In the second quarter of 2025, the Berlin real estate market is showing signs of slow stabilization after the downturn of previous years, triggered by rising interest rates, general investment restraint, and increased construction costs. The Berlin Expert Committee for Property Values, regarded as the primary source for officially confirmed real estate transactions and price trends, notes in its latest publications that between April and June 2025, there was particularly a consolidation of land prices and a cautious increase in transaction numbers.

The focus here is on the land reference values published in April with the cut-off date of 01.01.2025, which serve as the comparative basis for the second quarter. These values show that in many parts of Berlin—especially in sought-after submarkets like Charlottenburg-Wilmersdorf, Steglitz-Zehlendorf, or Pankow—there were no further price reductions but rather a price stabilization at a high level. Despite this stability, the overall transaction volume remains below pre-crisis levels: many market participants continue to act cautiously, especially with properties requiring major renovation or with low energy efficiency.

Building Plots / Stable Demand Meets Selective Buying Behavior /

In the area of building plots—especially for detached or semi-detached houses—the committee’s data from February to April 2025 shows that demand for developable land has slightly increased. The number of purchase contracts has risen compared to the first quarter, indicating an emerging market recovery in peripheral and mid-range locations. Achieved prices remain stable or slightly rising, without speculative surges as seen in 2021 or 2022.

Notably, the highest land prices are still being paid in the established western villa districts such as Grunewald, Dahlem, and Schmargendorf. There, reference values are sometimes over €2,800/m², while in Berlin’s peripheral locations prices are sometimes below €500/m². Prices now vary significantly depending on location quality, infrastructure, social environment, and recreational opportunities.

In July 2025, the Expert Committee also published new comparison factors for undeveloped plots, which can now be used across Berlin for the valuation of building land. This increases transparency and comparability in a segment previously marked by uncertainty.

Apartment Buildings (Multi-Family Houses) / Tentative Market Recovery at Moderate Price Levels /

The market for multi-family houses—apartment buildings with several rental or ownership units—recorded a cautious recovery in Q2 2025, after many investors had avoided transactions in the previous year and early 2025 due to regulatory uncertainties and increased financing costs. From January to June 2025, the committee recorded a total of 192 sales, 39 of which were in Q2 alone. This shows an increase compared to the first quarter but still no return to pre-crisis levels.

The average price achieved per square meter in Q2 2025 was €2,260/m² of living space, representing a moderate increase of around €150 compared to the previous year. However, the market shows strong differentiation: while classic old building multi-family houses in desirable inner-city locations remain in high demand, properties requiring extensive renovation or with poor energy efficiency are traded at significant discounts—if buyers can be found at all.

Single-Family and Two-Family Houses / Selective Purchases in Good Locations /

The single-family and two-family house segment also presents a differentiated picture in Q2. Demand remains restrained in classic single-family house districts such as Lichterfelde, Frohnau, or Mahlsdorf, while targeted purchases occur in premium residential areas such as Dahlem or Grunewald, especially by wealthy owner-occupiers. Price developments remain relatively stable there, as reflected in the new 2025 comparison values.

Due to higher construction interest rates and elevated construction costs, many buyers tend to opt for existing properties instead of building new ones. Renovating existing houses is seen as a more attractive alternative thanks to subsidies and tax advantages. Nevertheless, location remains crucial: peripheral areas are losing momentum, while inner-city districts with good transport links continue to attract buyers.

Owner-Occupied Apartments and New Builds / Divided Market Picture /

The owner-occupied apartment market is currently clearly divided into two segments: existing apartments in attractive locations with acceptable energy efficiency remain in demand, while new builds are suffering from buyer reluctance.

In Q2 2025, the average prices for existing apartments were around €5,300 to €5,400/m², depending on location. Smaller apartments in central districts like Prenzlauer Berg, Charlottenburg, or Kreuzberg remain popular—not least due to interest from investors.

Newly built apartments, on the other hand, are experiencing a continuing decline in demand. According to the committee, only about 260 new-build apartments were sold in H1 2025—a decline of around 30% compared to the previous year. Prices for new-build apartments remain in the range of €7,400 to €8,000/m², and even higher in prime locations. However, many prospective buyers are deterred by the high total financing costs. Particularly households with medium incomes are increasingly refraining from purchasing apartments.

Rental Apartment Buildings / Conservative Valuation Approach with New Real Asset Factors /

For rental properties, especially classic income properties, the Berlin Expert Committee published new real asset factors in July 2025, which are central for valuation using the income approach. These factors take into account current framework conditions on the Berlin rental market, such as rent regulations, maintenance backlogs, and energy requirements.

Purchase prices are currently oriented more towards yield potential than substance value. This leads to a significantly more conservative valuation than two years ago. Investors are increasingly focusing on high-yield properties with development potential—so-called value-add investments—while core assets with high regulatory constraints are often avoided.

Construction Financing & Interest Rates / Burden Remains High /

A key obstacle for the Berlin real estate market remains construction financing. The interest rate level is still high compared to the previous year—even though the European Central Bank made a slight rate cut in June 2025 for the first time. For many buyers, however, the monthly burden remains unaffordable, which has led to a drop in demand, especially in the new-build segment.

Banks are responding with stricter lending requirements, which negatively affects young buyers, the self-employed, and families with medium incomes in particular. Many construction financings fail due to equity requirements or creditworthiness checks. Thus, construction financing remains a key reason for the sluggish new-build market—despite existing demand for housing.

District Comparison / Dahlem – Grunewald – Schmargendorf (Q2 2025)

The three western villa districts of Berlin—Dahlem, Grunewald, and Schmargendorf—have been among the capital’s most exclusive residential addresses for decades. They show significantly above-average price levels for both single-family houses and owner-occupied apartments. Despite the generally cooled market, prices in these areas remain comparatively stable, as demand remains high—particularly from wealthy owner-occupiers and international buyers.

Average Square Meter Prices in Q2/2025

1) District / Avg. m² Price / Apartments (€ /m²)

• Dahlem €400
• Grunewald €700
• Schmargendorf €950

2) District / Avg. m² Price / Single-/Two-Family Houses (€ /m² living space)

• Dahlem €600
• Grunewald €200
• Schmargendorf €950

Source: Berlin Expert Committee, BORIS Berlin, Q2/2025.

Classification of Price Trends

• Grunewald continues to record the highest prices in comparison, both for apartments and single- and two-family houses. Villas with large plots and proximity to Grunewaldsee remain particularly sought after. Listed old buildings also achieve top prices.
• Dahlem closely follows, also offering a very high-quality market. Its proximity to scientific institutes and the Free University makes the area popular with international buyers. Demand is stable, supply limited.
• Schmargendorf ranks slightly lower but is considered a “hidden champion” among the three districts, as it is centrally located, offers good old building structures, and is priced slightly below Grunewald/Dahlem. Especially apartments from the 1930s to 1960s in good condition are in demand there.

Conclusion on the District Comparison

All three districts show strong price consistency in Q2 2025 despite interest rate pressures. The decline in transactions mainly affects properties with poor energy performance or locations with little development potential. However, top properties continue to change hands—often through off-market deals.

The high purchasing power in these districts means that buyers are less influenced by the interest rate environment, which clearly distinguishes these areas from the rest of the Berlin market. At the same time, the limited supply intensifies competition—which could again lead to price increases in the medium term.

City Comparison: Real Estate Prices in the Seven Top Major Cities (Q2/2025)

The development of real estate prices varies considerably across Germany’s metropolitan regions. While some cities—such as Munich or Hamburg—have already undergone noticeable market consolidation, Berlin showed a more robust price structure in Q2 2025, particularly in high-end submarkets.