Between 2014 and 2018, the homeownership rate in Germany rose by one percentage point from 45.5 to 46.5 percent of the private households. This is one of the findings quoted in the microcensus supplementary survey that the Federal Statistical Office published in October 2019 (source: www.destatis.de). In 2010, the homeownership rate equalled 45.7 percent according to the Statistical Office.

Since the start of the real estate boom and the rapid rise in condominium prices in the wake of the financial crisis of 2008/2009, the distribution of homeownership in Germany has barely shifted. This means that a large share of the country’s private households were unable to benefit from the rise in real estate values over the past ten years.  

Survey: Low Homeownership Rate Deepens Wealth Inequality

Instead, more than half of all German households keep renting rather than owner-occupying their homes. This puts Germany close to the bottom of the list among European countries as far as the distribution of homeownership goes. The only country with a yet high percentage of private rental households is Switzerland (source: www.lbs-markt-fuer-wohnimmobilien.de).

Survey after survey has shown that the low share of homeowners keeps deepening the wealth inequality in Germany. Most recently, a survey by the DIW German Institute for Economic Research, also published in October of 2019, drew attention to the fact (source: www.spiegel.de). The survey findings suggest that the private wealth of homeowners averages 225,000 euros, which is nearly ten times more than tenants own, whose average wealth amounts to 24,000 euros only.  

Survey’s Authors Call for More Support toward Wealth Accumulation

This goes to show that the low homeownership rate is an important factor when trying to explain why the wealth inequality in Germany is greater than in other European countries where the majority of households owner-occupy their homes. While the most affluent ten percent in Germany own more than 56 percent of the nation’s entire wealth, the least wealthy 50 percent of the population account for only 1.3 percent of the total wealth.

With this in mind, the authors of the DIW survey propose stepping up government support toward the accumulation of private wealth. They make explicit mention of the need to improve the support for private property ownership. The only program initiated in recent years to promote homeownership is the child tax credit for first-time home buyers introduced in the fall of 2018. Recently, the government also resolved to split the estate agent fee between seller and buyer, and this will help to bring down the incidental acquisition costs in many regions of Germany. But there is still no sign of any reform of the real estate transfer tax, which would be a far more effective way to lower the incidental acquisition costs.