Some half of German private assets are invested in real estate. The trade in offices, flats and private houses affects the economy as a whole, a fact amply demonstrated by the bursting of the US real estate bubble, which threw the world economy into crisis.
With buildings producing a third of carbon dioxide emissions, real estate has an important role to play in combating climate change.. Since modern homes require only a fraction of the energy used by old buildings, energetic refurbishment would make a great deal of sense. Yet this requires money and only pays off decades later – perhaps not within the lifetime of many investors, more than half of German homeowners being over 60 years of age. The government has realised that owners require support, but the subsidies developed to date are too complicated. If existing measures were bundled into a single package, that would be an important step in the right direction.
Germany has a growing need for housing. Among the manifold reasons for this are increasing prosperity and steady urbanisation. While in many rural areas there is too much new building, in the large conurbations and in many university towns there is a serious shortage of housing.
The need for home-building is steadily increasing in Germany as each person comes to require more floor space. While the population is becoming more prosperous and can afford larger homes, the average household has fewer and fewer members. People are moving in large numbers from the countryside to the city and it is in the big cities that the many recent immigrants to Germany prefer to settle. The need for housing is thus not spread evenly across the republic. While in many rural areas there is too much new building, in the large conurbations and in many university towns there is a serious shortage of housing. The task now falls to policy-makers and the real estate sector to meet the high demand for housing in the bigger cities. While it is essential that more building land be made available, the planning agenda must also include densification and extensions and conversions of existing buildings.
Der Immobilien-Index (genauer: IW-ImmobilienScout24-Index) ist ein Indikator für die konjunkturelle Entwicklung in der Immobilienwirtschaft. Das Institut der deutschen Wirtschaft realisiert den Index in Kooperation mit dem Onlineportal Immobilienscout24.
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With a great deal of office space standing empty and the demand for office premises likely to go on falling, the market for office real estate faces formidable challenges.
Moreover, the affordability of housing has a considerable influence on the social situation. The housing market in Germany varies widely, with prices rising steeply in the largest cities even as many rural areas face stagnating and even falling prices.
A great deal of energy could be saved in the real estate sector if property owners were to refurbish their properties. Unfortunately, too few are aware of how much they could save and what subsidies are available.
However, Germany’s existing building stock is a long way from achieving these objectives and progress in energy-saving modernization is stagnating. Today’s low energy prices simply offer too little incentive. Moreover, many landlords are deterred from investing in refurbishment by the profusion of subsidies available. Across the country there are currently a total of over 3,000 different government schemes offering financial assistance for energy conscious refurbishment of buildings.
If the government’s new energy policy is to succeed, the system requires urgent simplification. Subsidies for energy-efficient renovation should be supplemented by tax incentives and fully geared to the reduction of greenhouse gases - regardless of the technologies used.
Thanks to low interest rates, almost everywhere in Germany it is cheaper to buy a home than to rent it. Despite this, the country remains a land of tenants. The explanation lies not only in a shortage of available properties to buy, but also in the high capital requirements and the cost of the purchase transaction itself.
This situation could be remedied by restructuring stamp duty, a tax on land purchases, to make it payable in monthly instalments over a period of ten years. In addition, ways should be explored to assist low earners in financing a house purchase so that they need less capital for a deposit.