Germany Property News

Germany. Majority of Renters Believe They Will Never be Able to Buy a House

Germany. Majority of Renters Believe They Will Never be Able to Buy a House

Property prices have been rising rapidly in Germany for years, not only in the major cities but increasingly in rural areas too. According to a new survey, the majority of people renting in Germany now believe that buying a house in their desired area would be beyond their financial capabilities.

Majority of renters believe they cannot afford a house in their area
Most renters in Germany now believe that they would never be able to afford a house in the area they currently live in, according to a new survey by Interhyp, a mortgage broker in Germany.

Accordingly, more than half of those surveyed (a representative sample of 1.000 people who would like to buy a property in the next one to two years) stated that buying a property in their desired region was “hardly” or “not at all” financially viable. 65 percent said that high prices were preventing them from being able to buy.

“Many of those we interviewed have the feeling that prices are constantly increasing immeasurably,” said Jӧrg Utecht, CEO of the Interhyp group. “Anyone looking for a property in the sought-after locations of the metropolises will often have to make compromises like moving to the surrounding area or choosing a smaller property.”

German population losing faith in real estate market
The survey further showed that many people had lost their confidence in Germany’s real estate market - which has long been considered ultra-stable and thus a sound place for investment. 44 percent of those surveyed said that prices had become disconnected from the true value of property, while 77 percent said that there was a real estate bubble in Germany.

Around two-thirds said that this development was the result of the European Central Bank’s interest rate policy, while 46 percent blamed the scarcity of housing in Germany and the low level of construction activity. 37 percent said it was the fault of property speculators and investors.

Interhyp calls for more financial incentives for homebuyers
Utecht recommended that would-be buyers take advantage of as many financial incentives as possible and called politicians to create “more suitable state incentives” like reforming the land transfer tax, which can be as high as 6,5 percent of the purchase price.

In their coalition agreement, Germany’s new traffic light government stated that they wanted to give the federal states more localised control over this form of taxation, but concrete plans for how this might benefit, for instance, families, have not yet been revealed.

Meanwhile, prices are continuing to rise unabated on the German housing market. In the first quarter of 2022, the average cost of buying or building a property, including ancillary costs, rose to 540.000 euros, according to Interhyp. This is an increase of 14 percent compared to the same quarter in the previous year. In 2021, the year-on-year price rise was 9 percent.

Source: IamExpat Media

Published: April 27, 2022
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