This year’s Housing Costs Report shows that residential real estate in Germany continues to be an attractive long-term investment. The study, conducted in collaboration with the Institut der deutschen Wirtschaft e. V. (IW), calculated average owner-occupier costs of 13.14 euros per square meter for the year 2023. This means that, despite higher interest rates, buying a home was more affordable than renting in 127 of Germany’s 401 districts and independent cities.
Buyers with sufficient equity can take advantage of attractive opportunities in this market. The report highlights the long-term opportunities and potential returns for investors in the German residential real estate market.
The costs of homeownership rose once again in 2023 compared to the previous year. This was primarily due to high interest rates on debt. The shift in interest rates in the real estate market in 2022 and the further rise in interest rates in 2023 made homeownership less attractive compared to renting. However, a turning point appears to be on the horizon for 2024. With interest rates falling and rents for new leases continuing to rise, the relative advantages of homeownership will continue to grow.
The ACCENTRO Housing Costs Report 2024 reveals significant regional differences in the costs of owner-occupied housing. Some counties, such as Oder-Spree and Dahme-Spreewald, offer significant cost advantages. Particularly in the areas surrounding the top seven cities, homeownership remains more affordable than renting despite rising interest rates. These regional differences offer a wide range of opportunities for investors, as owning a home remains more cost-effective in many rural areas.
The ACCENTRO Housing Costs Report 2024 reveals significant regional differences in the costs of owner-occupied housing. Some counties, such as Oder-Spree and Dahme-Spreewald, offer significant cost advantages. Particularly in the areas surrounding the top seven cities, homeownership remains more affordable than renting despite rising interest rates. These regional differences offer a wide range of opportunities for investors, as owning a home remains more cost-effective in many rural areas.
The return triangle developed for the ACCENTRO Housing Costs Report 2024 illustrates the average annual returns in the housing market. Between 1970 and 2023, these returns achieved a real total return of 5.4 percent in Germany. This underscores the stability of home ownership. Historically, total returns have recovered quickly following crises. The data suggests that total returns in the 2020s will be at a historically above-average level, as there are far too few apartments available in many metropolitan areas.
