Homeownership remains attractive. At present, owner-occupying your home is more affordable than renting in 94 percent of Germany’s districts and independent cities. The average economic benefit of homeownership nationwide is nearly 40 percent. Even in the country’s metropolises, where condominium prices experienced particularly brisk growth in recent years, homeownership retains its economic benefits. Owner-occupancy in Berlin, for instance, is currently about 27 percent more affordable than renting, while being 35 percent more affordable in Hamburg. This is explained by the combination of simultaneous rental growth and the still highly favourable conditions on the market for mortgage loans. While interest rates have registered a modest increase lately, they are not expected to go up sharply any time soon. Moreover, an interest rate sensitivity analysis revealed that a large number of districts would be resilient to an interest rate tightening cycle. The fact that owner-occupied-housing costs are lower than the costs of renting almost everywhere also suggest that prices for freehold residential property are more likely to keep rising, defusing concerns that the housing market might be overheating.
Meanwhile, the fact that the number of first-time buyers has declined overall while their age average and— most recently—their income levels have increased indicates that few households in Germany benefit from the favourable terms of financing in the sense that they take advantage of them to acquire homes for owner-occupancy. Capital adequacy requirements, which go up in sync with rising prices, represent one of several reasons for this. In order to enable more households to opt for homeownership and, not least, to bolster their retirement schemes by doing so, the body politic should review the entry thresholds on the market for freehold residential property and lower them for the sake of preserving the country’s financial stability.