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How much home do you get for your money?

Christine Rose
Editor at Immobilien Zeitung

According to Sparda-Banken owner-occupied homes are affordable. What is left is the question about demands.

In the last few years home prices have been going up in many parts of Germany. Nevertheless a Sparda-Banken study shows that for most buyers purchasing a property is “affordable”. The amount of floor area your money will buy, however, varies considerably depending on the location.

A property is affordable if it costs as much as the average investment Germans make in the construction or purchase of their own home: i.e. EUR 242,000 or about six annual household incomes before tax. This will buy you an average of 126 square meters. So the price is EUR 1,920 per square meter.

Eye-rolling in Munich and Hamburg

Buyers in Munich and Hamburg will probably roll their eyes in disbelief in view of these numbers. And the study actually says that there are “considerable” regional “differences” in terms of the space provided by this affordable home. In Munich it is 44 square meters. In Hamburg you get 70, in Frankfurt 72 and in Berlin just under 100 square meters. All 402 districts are included. For the seven big cities of Berlin, Hamburg, Düsseldorf, Cologne, Munich, Frankfurt and Stuttgart as well as the 63 urban districts, prices for apartments were used. The data for the 292 districts is based on owner-occupied home prices.

What the difference may be when it comes to what “affordable” actually means is illustrated by a look at the most expensive and the cheapest part of the country. The City of Munich is not even the most expensive location, it is outdone by the District of Munich. One square meter costs EUR 5,862 there, so an affordable property has 41 square meters. At the other end of the scale is Stendal in Saxony-Anhalt, where you can reside on 299 square meters for the same amount of money.

About one quarter of tenants between 16 and 50 want to buy

Another result of the study is that 26% of all tenants between 16 and 50 want to acquire property – 8 percent of them within the next two to three years. The answer to the question whether households in rented accommodation can afford their own property is: With a mean income of just over EUR 2,000 after tax about one of three households meets the deposit requirements. With a household income of more than EUR 6,000 this applies to 80%.

For those who do not want to buy the main reason are long-term financial risks, including rising interest rates. Apart from that the high property prices are mentioned. In fact according to Postbank’s “Wohnatlas 2017” incomes went up less than property prices in big cities between 2012 and 2016. The greatest gap was found in Stuttgart: The average available annual per capita income after tax went up by 2.5 per cent to EUR 24,921 there, while the property price increased by 53.5 per cent to EUR 3,535 per square meter. In Nuremberg the rise in incomes (plus 3.6%) lags far behind that in property prices (plus 38.5%). Only in Frankfurt did incomes (plus 20.9%) roughly keep pace with the price increase of 28.9%.

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