Berlin, July 11, 2017 – The 2017 Accentro-IW Housing Costs Report shows that buying a home in Germany remains significantly cheaper nationwide than renting one. Compared to the previous year, however, the number of first-time homebuyers is declining: It is becoming increasingly difficult for young families to become homeowners, and this trend is on the rise. Looking at Germany as a whole, buying a home is, on average, about 33 percent cheaper than renting. In 2016, that advantage was still 41 percent. For the 2017 Housing Costs Report, rents and housing costs across all 401 counties and independent cities nationwide were analyzed. The study was conducted by the Cologne Institute for Economic Research (IW) on behalf of Accentro Real Estate AG, under the scientific direction of Prof. Dr. Voigtländer.
“Just a few years ago, the mantra was ‘Pensions are secure.’ In the meantime, retirement planning has become the responsibility of each individual. Therefore, the importance of homeownership for the generation of 35-year-olds today cannot be overstated. The Accentro-IW Housing Costs Report confirms that it is cheaper to buy than to rent. At the same time, thanks to the study’s socioeconomic analysis, we know that today’s buyers tend to be 48-year-old dual-income couples without children, not young families with children. To support first-time homebuyers as well as young families, undesirable trends of recent years—such as the rise in ancillary purchase costs—must be reversed. “Good approaches to this—such as waiving the real estate transfer tax for first-time buyers—could make retirement planning significantly easier for this generation,” explains Jacopo Mingazzini, CEO of Accentro Real Estate AG.
Advantage for owner-occupiers higher in the north than in the south—33 percent nationwide
Since 2008, the costs of owner-occupancy have fallen steadily. It is only in the past two quarters that these costs have risen again. Nevertheless, on a national average, purchasing an existing property is about 33 percent cheaper than renting a comparable residential unit on the secondary market. In 2016, this figure was still around 41 percent. With a few exceptions, a clear north-south divide can be observed: In Hamburg, the advantage is highest at 40 percent, while in Stuttgart it stands at just 23 percent. The cost advantage in Berlin is 36 percent. In all of the top 7 locations, owning a home for personal use offers a cost advantage. The calculation is based on net base rents as well as the costs incurred by owner-occupiers, which include the purchase price, incidental purchase costs, mortgage interest, and lost interest on equity, as well as maintenance and depreciation.
Homeownership Is Becoming More Affordable—Yet the Rate of Homeownership Is Stagnating
In recent years, homeownership has become increasingly affordable due to low interest rates. Despite these facts, the homeownership rate in Germany has stagnated, particularly in metropolitan regions. In addition, the number of households that have moved from rental housing to homeownership is declining—since 2013, the figure has fallen by 25 percent. At the same time, the average age of homebuyers has dropped slightly from 50 to 48 years.
Compared to other countries, the transition from renting to homeownership occurs relatively late. The main group making this transition consists of childless married couples living together. These households are predominantly dual-income and have higher incomes. Many of those making the switch (more than 30%) are also single people with high net incomes.
“Buying is still more affordable than renting due to persistently low interest rates, even in major cities. The savings amount to 36 percent in Berlin, 37 percent in Frankfurt am Main, and 24 percent in Munich. However, the number of buyers is declining; furthermore, urban buyers are getting older and have fewer children. On average, first-time homebuyers in the city are already 48 years old, and the number of children per buyer household has fallen from 0.55 to 0.35 in the past two years alone. The reason for this is the high capital requirements resulting from purchase-related costs and down payment requirements, which deter many households from buying a home. “Yet it would be particularly important for the younger generation to supplement their retirement savings with home ownership,” says Prof. Dr. Michael Voigtländer, head of the Financial and Real Estate Markets division at the IW Cologne, summarizing his study.
Risk of Refinancing Is Low
Unlike renters, homeowners build up their assets through mortgage principal payments. Even if interest rates rise to 4.5 percent for refinancing, homeowners face a lower financial burden than renters, despite interest payments, principal payments, and maintenance costs. This applies to 93 percent of districts and means that retirement planning is practically free. In only about 7 percent of districts does home ownership involve additional costs compared to renting—most of these districts are located in the greater Munich area.
About the Cologne Institute for Economic Research
The Cologne Institute for Economic Research is a private economic research institute committed to a free-market economic and social order. The Cologne Institute for Economic Research is a registered association. Our members include approximately 110 business and employer associations in Germany, as well as individual companies. Our project partners primarily consist of foundations, associations, and public institutions.
About ACCENTRO Real Estate AG
ACCENTRO Real Estate AG is a residential real estate investor and the market leader in housing privatization in Germany. As of December 31, 2020, its real estate portfolio comprised approximately 5,200 units. In addition to Berlin, its regional focus includes major cities and metropolitan areas in eastern Germany, as well as the Rhine-Ruhr metropolitan region and Bavaria. ACCENTRO’s business activities encompass four core areas. These include the sale of apartments to owner-occupiers and private investors at rent-based prices, the sale of real estate portfolios to institutional investors, the development and management of its own real estate portfolio, and the marketing of apartments for property owners, investors, and project developers. The shares of ACCENTRO Real Estate AG are listed on the Prime Standard of the Frankfurt Stock Exchange (WKN: A0KFKB, ISIN: DE000A0KFKB3). investors.accentro.de
Contact for Press and Public Relations
Karl-Philipp Jann
PB3C GmbH
Rankestrasse 17
10789 Berlin
jann@pb3c.com
+49 (0)30 - 72 62 76 1612
Investor Relations Contact:
Thomas Eisenlohr
ACCENTRO Real Estate AG
Kantstraße 44/45
10625 Berlin
Email: eisenlohr@accentro.de
Phone: +49 (0)30 88 71 81 272