Real estate - Study: Buying a home in Germany has become more affordable
In some German regions, the purchase of a dwelling has become more affordable. This is evident from data obtained by the Hamburg Institute for World Economics (HWWI) for the Postbank Housing Atlas. "Decreased house prices and increased income make it easier for average earners to find an ownership dwelling that ideally binds no more than a quarter of their net household income for financing," said Manuel Beermann, responsible for Postbank's real estate business, in a statement on Friday. The report was first mentioned in "Die Welt."
The proportion of the sum of interest and amortization (annuity) to income therefore decreased nationwide last year by 5.1 percentage points to 19.4 percent. Annuity refers to the annual repayment to the credit provider. According to economists' calculations, the share of income burden in 331 of the 400 considered cities and districts was below the threshold of 25 percent.
Nationwide, the best situation is in the Thuringian district of Greiz. Buyers paid there 7.9 percent of their household income to finance the purchase of an ownership dwelling. Similarly low were the requirements in the Saxon Vogtland district (8.0 percent) and the Brandenburg district of Elbe-Elster (8.4 percent).
Twenty-seven percent of German households lived in the 69 free cities and districts where the average household had to pay more than a quarter of their available income for financing. The leading district, according to calculations, is Nordfriesland - it includes the islands of Sylt, Amrum, and Föhr. Buyers had to pay, on average, 59.8 percent of their household income to finance an ownership dwelling. People paid the most in Munich with 46.7 percent, followed by Berlin in third place (46.4 percent). In Hamburg and Frankfurt am Main, the rate was each around 40 percent.
The proportion also decreased for tenants' rent
The average income share for net rent also decreased from 14.4 percent to 14.1 percent. Except for Berlin (26.4 percent) and Munich (25.8 percent), the income burden remained below the threshold of 25 percent. However, according to the data, buyers had to spend a smaller proportion of their net income for financing a home in 37 of the 400 regions than for rent.
The experts based their calculation for the previous year on an interest rate of 3.5 percent and an initial amortization rate of 2.5 percent. To calculate income in relation to the purchase price, they assumed a living space of 70 square meters. Costs for brokers or renovation work were not taken into account. For the year 2022, economists also assumed a 70-square-meter living space, but they calculated with a 2.1 percent amortization rate and a 4.6 percent interest rate.
- In Munich, where housing prices are high, buyers typically spend 46.7% of their net household income on a condominium purchase, according to the Postbank Housing Atlas.
- To make a home purchase more affordable in real estate markets like Germany, many average earners are looking at condominiums, as they often require less financing than a single-family home.
- In contrast to some German regions that have seen decreased house prices and increased income, condominium prices in Munich and Berlin still require a significant portion of net income for financing, making them less appealing to many buyers.
- Postbank's real estate business, as mentioned by Manuel Beermann, has seen a decrease in the proportion of income required for condominium financing nationwide, making it a more viable option for many potential buyers.
- Prospective buyers in Hamburg or Frankfurt am Main may find it more affordable to purchase a condominium than to rent, considering the decrease in financing requirements for property ownership, as shown in the Postbank Housing Atlas report.
