[lumost]

The only way for housing to keep rising at its current speeds is for buyers to spend a greater share of income on housing and for interest rates to fall.

Interest rates are near zero and individuals are spending very large portions of their income on housing. Continued expectations for high returns on housing will lead to hard landings/defaults or pathological cases where renters don’t pay rent and can’t be evicted.

[ivan_gammel]

This is based on assumption that average property user income will not rise and that the possible profits are almost maximized. Berlin is growing fast, creating lots of new jobs, often well-paid ones (above national average) filled by immigration, so demand is growing faster than construction of new apartments. And prices are still below Munich or other big cities. That said, this is an indicator of liquidity showing that property is indeed a secure and reliable asset, but this is not the reason for investment by city.