I've copied and pasted below a response i made a couple of weeks back to a similar post. I've just bought a place in Berlin (Tiergarten) as an investment. I paid € 25 k for a 42 sq metre 1.5-Zimmer apartment that could do with a lick of paint and a new kitchen but is otherwise fine. You wouldn't get a garden shed in the UK for that!!
Will be happy to answer any questions. Good luck
I agree that the German property market is different from the UK but in the case of Berlin I cannot see how anyone can lose out based on current property prices. I researched thoroughly before committing and after a very steep learning curve i would be happy to offer a few tips for anyone considering doing it.
1. Average price is approx € 1,000 per square metre in reasonable areas i.e. not the top locations but also not "little Istanbul". This price is comparable to nice areas of Warsaw, Budapest, Bratislava and Prague. In Berlin wages are about triple what they are in comparable East European capitals. This anomaly will not last forever. Market forces will dictate that.
2. Prices are pretty much rock bottom at the moment. Between 1989 and 1994 prices went up by ca. 40% and they have now gone back to what they were pre-Wende. Yes there is a glut of housing which has driven down prices, but there is still demand for rental property in popular areas. I would not buy anywhere in Lichtenberg
or Hoeheschonhausen in a million years but if you stay in the central or western districts there is demand there.
3. Sooner or later prices will go up. Germans are negative about investing in property because they have seen their economy go up shit creek over the past few years. Would your average punter living in SE England have advocated investing in property in 1993. Probably not. But if he had have done he would've been laughing all the way to the bank right now.
4. Unemployment and lack of demand from the domestic market will not completely dictate property prices. Many large companies and the city council are selling blocks of apartments to foreign investors and funds. This will increase once the property boom in Eastern Europe comes to an end. Coupled with this, where else in Western Europe apart from France is property still affordable to your average joe? Germany (and Berlin in particular) is a unique case. It is not reliant on good weather and Easyjet flights to stimulate property investment from foreigners.
5. In some areas of Berlin it is cheaper to buy property than it is to build somewhere from scratch. This goes to prove that the price of housing cannot fall any further.
Sorry forgot to mention the Hausgeld on my place is € 166 per month but my tenant pays most of that in his Warmmiete.