Affordability of real estate ownership
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Demand for real estate is booming: In April 2021, ImmoScout24 received around 72 percent more enquiries for condominiums than last year. Demand for rental flats rose by 19 percent in the same period. The high demand is having an impact on prices.
Where can one still buy or rent property under the current market conditions? Based on the average net household income and the average housing costs given by the Federal Statistical Office, the real estate portal has taken as a basis a net cold rent between 800 and 1,000 euros and a comparable purchase price range between 217,000 and 272,000 euros.
The analysis shows large, regional differences for 40 major German cities: While in the metropolises a budget of 800 to 1,000 euros for purchase and rent is only enough for a one- to two-room flat, in cities such as Dortmund, Heidelberg and Kassel there are still affordable flats that offer space for a family.
If one compares the average size of the flats according to whether the budget is put into renting or financing, clear differences become apparent: In Heidelberg and Dortmund, buying is worthwhile: for the same budget, an owner-occupied flat measures five to six square metres more than the comparably expensive rented flat. In Oldenburg, on the other hand, those who rent a flat instead of buying it get 31 square metres more living space.
The Institut der deutschen Wirtschaft (Institute of the German Economy) in Cologne has stated: "Despite significantly rising prices for single-family houses, the affordability of home ownership in large parts of Germany has not declined as much as a pure focus on prices would initially suggest. Sharp declines in interest rates and significant increases in household incomes mean that the annuity-to-income ratio has remained unchanged in many places."
(Photo: © Jeannette Mijares, Pixapay)