How housing can become more affordable again

Housing is expensive, whether you are buying or renting. Prices are extremely high, especially for new builds. If you can make compromises in terms of furnishings, car park or floor, you can save considerably.

The search for affordable housing is like a game of chance, especially in places where many people live in small spaces. More supply could relieve the market - but building is becoming increasingly expensive because materials are becoming scarce, skilled labour is in short supply and, above all, interest rates are high. A new study by the German Economic Institute (IW) shows how politicians and property developers can nevertheless reduce prices or at least curb price increases.

According to the study, flats with simple furnishings - for example with cheaper flooring - cost around 7.5 per cent less to rent and 15 per cent less to buy. Not having a cellar or guest WC saves up to another three per cent. Flats in higher buildings are also generally cheaper. Although converted attic flats are a sensible extension, the study shows that these newly built flats are not necessarily cost-efficient. There is also potential for savings when it comes to car parking spaces: Flats without a parking space are more than eight per cent cheaper to buy, while the parking space accounts for a price difference of just under six per cent when renting.

Generally speaking, sacrificing living space offers the greatest leverage for lower purchase and rental prices. Although small flats are generally associated with higher prices per square metre, they lead to significantly lower prices per residential unit in absolute terms.

"Housing needs to become more affordable again, and there is no way around affordable new construction," says IW property expert Michael Voigtländer.  However, this is in a difficult situation, to which the local authorities are also contributing: Real estate transfer tax is a burden on all parties involved in the construction of a property, project developers and buyers alike - even several times over when it comes to resale. This drives up ancillary costs and therefore purchase and rental prices.  "New builds could be exempt from the tax, as in the Netherlands or Belgium," says Michael Voigtländer. "Local authorities must now rethink their approach in order to relieve the market wherever possible."

(Photo: © Martin-b, Pixabay)