Are you wondering why Berlin´s Real Estate prices are so low and why 89% of its residents prefer to rent their own places to live in instead of buying?
The answer to this question goes back more than 20 years, all the way to the time when Berlin was divided between the “Planned Economy” (Zentrale Planwirtschaft) in the East and “Social Market Economy” (Soziale Marktwirtschaft) in the West.
As a result, East Berliners were not able to accumulate capital, thus creating a huge gap between the purchasing powers of the two sides. West Berliners had their money in banks in West Germany mainly in Frankfurt am Main because they were worried that if they bought properties, Russians will come to nationalize them.
After the wall fell down in 1989, East Berliners who were unemployed migrated away from Berlin and into other parts of Germany in search of new jobs, incrementing home vacancy. This, in turn, resulted in a decrease of Real Estate prices due to the lack of demand. Read more
