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An apartment building in Berlin
Berlin's state-owned housing associations reached a landmark target this month, crossing the threshold of 400,000 municipally owned apartments ahead of schedule — a political achievement a decade in the making. Yet for the hundreds of thousands of Berliners still searching for affordable accommodation in one of Europe's tightest rental markets, the milestone offers little comfort. Rents are rising sharply, vacancy sits at a historic low, and privately funded new-build housing is effectively out of reach for the majority of the city's residents. The gap between political achievement and market reality has rarely been wider.
The seven state-owned housing associations — Berlinovo, Degewo, Gesobau, Gewobag, Howoge, Stadt und Land and WBM — expanded their combined portfolio from 311,929 apartments in 2016 to 404,170 by the end of 2025, with a further increase to 412,454 expected by year-end. Around 43,000 apartments were newly built and let over the decade, while almost 49,000 were purchased from existing stock, including a significant tranche from Vonovia. Total investment amounted to more than €14 billion, split between €8.3 billion in acquisitions and €5.7 billion in maintenance and modernisation.
Governing Mayor Kai Wegner (CDU) used the occasion to announce a Roadmap 2.0, targeting 500,000 affordable state-owned homes by 2035, with details to be published in early June. The average rent for existing properties in the state-owned stock stood at €7.09 net per square metre per month at the end of 2025, marginally below the Berlin-wide rent index of €7.21, and less than half the average asking rent of €17.76 listed on property portals.
A milestone with an asterisk
The achievement is real, but the headline number requires context. Of the 43,000 newly built apartments delivered over the decade, only 16,500 were constructed as social housing with subsidised rents. Over the same period, around 80,000 units fell out of the social housing scheme as their affordability commitments expired. The net social housing position in Berlin has therefore deteriorated significantly even as the portfolio total has grown impressively.
Wibke Werner, Managing Director of the Berlin Tenants' Association (BMV), called the outcome sobering given the billions invested and the 80,000 social housing commitments that had expired over the same period. She called for the proportion of subsidised apartments in new builds under Roadmap 2.0 to be raised to 70%, against a current subsidy rate of 50%.
The lock-in effect is compounding the supply problem. With open market rents rising sharply, tenants in affordable properties are staying put for longer than ever. The average tenancy length in state-owned housing stock has risen from 18 years in 2016 to 25 years in 2025, and turnover has fallen to just 4%. Ingo Malter, Managing Director of Stadt und Land and spokesperson for the state-owned associations, put the consequence starkly: "Historically, a 10% turnover rate was normal in the housing sector. That would amount to 160,000 apartments in Berlin annually. In reality, we are now looking at perhaps 60,000 apartments being advertised each year."
The rent gap widens
The latest market data from the Association of Berlin-Brandenburg Housing Companies (BBU) makes for sobering reading. Average net rents for new tenancies among BBU member companies, which manage around 777,000 apartments accounting for approximately 45% of Berlin's rental stock, rose by around 11% in 2025 to €9.54 per square metre. New-build rents averaged €13.55 per square metre, up 7% year on year. The vacancy rate stands at just 1.6%. When BBU member companies are excluded from portal rental data, average asking rents stand at €18.76 net per square metre, almost twice the level of new contract rents among BBU members.
The affordability gap in the privately funded new-build sector is particularly acute. According to research from Investitionsbank Berlin (IBB), the average Berlin household can afford basic rents of between €12.00 and €12.90 per square metre, assuming housing costs do not exceed 30% of net household income. Asking rents in privately funded new-build housing average €20 per square metre, with many projects priced at €25 or above.
Sascha Nöske, CEO of Strategis AG, identified an effective market ceiling. "Income trends in Berlin no longer allow for it. If prices are set too high, there is a risk of prolonged vacancy, and that is not economically viable." The data supports his analysis: apartments priced at around €12 per square metre let within four to five days, while those averaging €23 per square metre take around eight weeks to find a tenant.
Construction costs, which rose by around 80% between 2016 and 2025, are a primary driver of the affordability gap. Uwe Bottermann, solicitor and partner at Bottermann::Khorrami, identified the regulatory burden as a compounding factor. "The main drivers of construction costs are not so much the interest rates on project financing as the ever-changing requirements faced by developers and investors." Further regulatory proposals, including social quotas for existing rental stock and profit caps for investors, are viewed with alarm by market participants.
The homeownership question
Underlying Berlin's rental market crisis is a structural characteristic that sets the city apart from most European capitals: a homeownership rate of just 15%. Jacopo Mingazzini, Director of The Grounds Real Estate Development AG, argued in a recent commentary that this is not simply a product of preference. "If you ask Berliners today, the majority would prefer to own their own homes. Whilst there are many tenants, few wish to remain so."
Mingazzini reserved particular criticism for milieu protection zones, which cover large parts of Berlin's city centre and effectively prohibit the conversion of rental properties into owner-occupied apartments. "The ban on subdivision specifically prevents tenants from buying their apartments and ensures that affordable existing apartments are not available for purchase." In his analysis, policies ostensibly designed to protect lower-income residents from displacement are in practice entrenching the conditions that harm them.
Mayor Wegner acknowledged the private sector dimension, noting that Berlin will need space for a further 272,000 apartments by 2040. Dr Lars Vandrei, Head of Research at Catella Investment Management, offered a measured investor perspective: "The purchase of new-build properties for institutional investors at 22 times the annual net rent still makes financial sense. If this can no longer be achieved through the rent, land prices and construction costs must fall."
Berlin's housing challenge is not one that 500,000 state-owned apartments alone can resolve. The capital's political class has demonstrated that it can expand public housing at scale, but the structural forces driving unaffordability in the private sector, suppressing homeownership and eroding the social housing stock, remain largely unaddressed. Roadmap 2.0 sets an ambitious new target. Whether the policy framework surrounding it will prove equal to the task is a different question entirely.