Germany has traditionally been a country of tenants – the majority of households here rent their homes, whereas the homeownership rate has flatlined at 45 percent for many years. But a recent survey by the Interhyp financial services provider suggests the reason for this situation is not that Germans simply love renting. According to its findings, two out of three German tenants actually dream of owning their homes outright one day (source: wohntraumstudie.interhyp.de).
The survey suggests that there are various reasons to explain the desire for homeownership. The reason most frequently cited is the wish to be rid of rent payments, and it is probably prompted by the recent rent hikes in many cities and the growing concern among tenants that rents could become unaffordable. The second-most relevant reason is the freedom to decorate your home independently from the landlord’s specifications or consent. Next in line are security in old age and the wish to invest safely, and both reasons point to the significance that homeownership has for asset building and private retirement planning.
Striking to note is that the desire of people to own their own four walls is as intense in the major cities, where the homeownership rate is lowest, as it is in rural areas. In Berlin and Hamburg, for instance, 66 percent of all tenants would prefer to own their homes, yet the homeownership rate is a mere 16 and 22 percent, respectively (source: lbs-markt-fuer-wohnimmobilien.de).
One of the obvious obstacles to homeownership is the financial situation. Among the tenants who would love to buy, 38 percent stated that they lacked the financial wherewithal to do so (source: interhyp.de). But this implies inversely that the majority of tenants contemplating homeownership are or will be in a financial position to do so, principally speaking. If the body politic were to create stimuli to facilitate the decision, for instance by helping to bring down the incidental acquisition costs, more people would have a chance to opt for homeownership.
Such incentives would be particularly important for the younger generation, because the earlier a given household takes the step toward homeownership, the higher its chances to repay the mortgage loan before reaching retirement age. The Interhyp survey also shows that the desire for homeownership is most pronounced among younger people. Of the German respondents aged 18 through 39, only 15 percent actually stated they prefer to rent their homes.
In addition to the autonomy from rental growth and enhanced security in old age, reasons in favour of homeownership include a higher level of contentment with the own accommodation. Indeed, the survey found that 92 percent of those who bought are pleased with their decision. Owners also made more positive assessments of the available space, fit-out and building fabric than tenants did.