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Michael Voigtländer / Pekka Sagner Expertise 30. April 2019 ACCENTRO Housing Cost Report 2019: An analysis of rents and housing occupancy costs for 401 counties

The residential user cost approach allows a comparison of rental costs and regular costs incurred by a homeowner. This approach is used to determine the relative advantageousness of home ownership over renting.

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An analysis of rents and housing occupancy costs for 401 counties
Michael Voigtländer / Pekka Sagner Expertise 30. April 2019

ACCENTRO Housing Cost Report 2019: An analysis of rents and housing occupancy costs for 401 counties

Expertise

German Economic Institute (IW) German Economic Institute (IW)

The residential user cost approach allows a comparison of rental costs and regular costs incurred by a homeowner. This approach is used to determine the relative advantageousness of home ownership over renting.

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.

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An analysis of rents and housing occupancy costs for 401 counties
Michael Voigtländer / Pekka Sagner Expertise 30. April 2019

Pekka Sagner / Michael Voigtländer: ACCENTRO-IW HOUSING COST REPORT 2019

Expertise

German Economic Institute (IW) German Economic Institute (IW)

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Financialization in 13 cities – an international comparative report
Christine Whitehead / Kath Scanlon / Michael Voigtländer / Jacob Karlsson / Fanny Blanc / Martina Rotolo Expertise 3. July 2023

Financialization in 13 cities – an international comparative report

Over the last 20 years, financialization of the housing market has become a topic of increasing public and political concern, especially in high-demand cities. It has also become an important element in academic discussion.

IW

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Michael Voigtländer / Jonas Zdrzalek IW-Trends No. 1 14. April 2022

An Analysis of the Current Risk Levels in Residential Real Estate Financing in Germany

The German Federal Financial Supervisory Authority (BaFin) is keeping a watchful eye on the granting of housing mortgages and from 2023 on will require lending banks to increase their equity capital to cover potential risks.

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