Buying a home in Germany has become more affordable


Lerato Khumalo

There is a severe housing shortage throughout Germany and condominiums are expensive. New data now gives buyers hope in terms of affordability. But not everywhere.

In some German regions, buying an apartment has become more affordable. This is evident from data from the Hamburg Institute of International Economics (HWWI), which it compiled for Postbank’s housing atlas.

“Lower purchase prices and increased incomes make it easier for average earners in many regions to find a condominium that ideally only requires a quarter of the household’s net income to finance it,” said Manuel Beermann, who is responsible for Postbank’s real estate business, on Friday, according to a statement. The “Welt” newspaper was the first to report on this.

The share of the sum of interest and repayment (annuity) in income fell by 5.1 percentage points to 19.4 percent on average across Germany last year. The annuity is the annual repayment to the lender. According to the economists’ calculations, the proportionate income burden was below the threshold of 25 percent in 331 of the 400 cities and districts examined.

The situation looks best nationwide in the Thuringian district of Greiz. Buyers there paid 7.9 percent of their household income to finance the purchase of a condominium. In the Saxon Vogtland district (8.0 percent) and the Brandenburg district of Elbe-Elster (8.4 percent), people also had to spend comparatively little of their income to finance an apartment.

27 percent of German households lived in the 69 independent cities and districts in which the average household had to pay more than a quarter of its disposable income to finance it. According to the calculations, the district of Nordfriesland, which includes the islands of Sylt, Amrum and Föhr, is the leader.

To finance a condominium, buyers had to pay an average of 59.8 percent of their household income. People in the Bavarian capital paid the second most Munich with 46.7 percent, followed by Berlin in third place (46.4 percent). In Hamburg and Frankfurt am Main the rate was around 40 percent each.

For tenants, the average share of income for net rent also fell from 14.4 percent to 14.1 percent. With the exception of Berlin (26.4 percent) and Munich (25.8 percent), the income burden remained below the 25 percent threshold. According to the information, however, buyers in 37 of the 400 regions had to spend a smaller share of their net income on financing an apartment than on rent.

For their calculations for last year, the experts assumed an interest rate of 3.5 percent and an initial repayment rate of 2.5 percent. In order to be able to calculate the income in comparison to the purchase price, they assumed an apartment size of 70 square meters. Costs for brokers or renovation work were not taken into account. For 2022, the economists also assumed a 70-square-meter apartment, but they assumed a repayment rate of 2.1 percent and an interest rate of 4.6 percent.