Rising property prices: 5 graphics show why the dream of owning a house breaks for more and more Germans
In Germany and Europe, a growing number of people are worried that they will no longer be able to fulfill their dream of owning their own property. But is there really cause for concern?
The majority of Germans want to buy their own home. The most common arguments are better security in old age, freedom from rent and more creative freedom. But more and more people are looking with concern at this goal. Due to rising property prices An increasing number no longer believe that they will be able to buy their own home in the future. But is there really cause for concern?
Property prices have exploded in recent years
But first and foremost: Property prices have risen sharply in recent years. It also shows the house price index from the Federal Statistical Office.
Compared to 2015, house prices rose by more than 60 percentage points. Existing properties in particular increased in value. During the same period, the general consumer price index rose by only 16 percentage points. A difference of over 44 percentage points.
However, house prices have not risen at the same rate everywhere. This is especially true of the price indices for detached and semi-detached houses. While prices in big cities and urban areas rose by about 50 percentage points, in rural areas they were even up to 70 percentage points within six years.
Meanwhile, the largest increase was in the seven major metropolises (Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart). Here, prices rose by 80 percent in the period from 2015 to 2021.
In an international comparison, Germany is affordable
Based on the current price for one square meter of housing, Munich is far ahead of other German metropolises. A square meter in the center of the Bavarian state capital currently costs 13,420 euros – significantly more than, for example, in Frankfurt (9975 euros) or Hamburg (8417 euros).
In a European comparison, however, Munich is not at the top. In London, a square meter costs the equivalent of almost 15,700 euros – in Zurich even almost 16,000 euros. However, Paris is cheaper than Munich. Here, a square meter costs 12,395 euros, which is almost 1,000 euros less.
But when you look at the relationship between price and income, the picture changes drastically. The price-income ratio describes the relationship between median house prices and the average annual disposable income for a family. This is based on 1.5 times the population’s median net salary and an apartment size of 90 square meters.
With a ratio of 16.6, Munich is well above Zurich (7.9) and London (14.5), but still well away from other European cities. Locals in cities like Paris or Moscow need 19.2 or 22.2 times their annual income to be able to fulfill their dream of owning their own home.
Internationally, however, Germany is one of the countries where home ownership is still relatively cheap. In this country, the price / income ratio is 8.9. Other leading economies have very different values. In Japan, the ratio of house prices to annual income is 11.0 – in China it is even 29.0. Only the United States as a leading industrial nation is significantly below Germany with 4.0.
Prices are rising faster than income
However, although the price-to-income ratio in Germany is still relatively good in an international comparison, the situation of persons resident in Germany has deteriorated significantly in recent years.
This is seen especially by the connection between disposable income per. per capita and the house price index. The disposable income per. per capita reflects the purchasing power of private households, where taxes and social security contributions have already been deducted.
The ratio between income and house prices in Germany has deteriorated significantly since 2010. Especially since 2014, the value has fallen significantly. While the ratio was 96.4 in 2014, it was only 76.34 in 2020. From this it can be deduced that house prices have risen much faster than the disposable income per capita. inhabitant. It is not yet possible to calculate a value for 2021, but the ratio can be expected to continue to decline this year.
A downward trend can also be seen at European level. The share has been steadily declining since 2014. Until 2019, the ratio was still above the base year 2010, but the value fell to just over 95 in the 2020 observation period.
The dream of owning a home is far away
There is currently no end in sight to this development. For many, the dream of owning their own home may be even more distant. For the time being, inflation will lead to a further increase in the expropriation of savers. In addition, rising interest rates in the foreseeable future will make it less attractive to borrow.
However, the dream of owning your own home should not be completely abandoned. If too many people can no longer afford real estate, demand will fall significantly. This in turn will be reflected in falling purchase prices. Until then, however, many will have to remain with the dream of owning their own home.
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