Falling numbers of German tenants now striving for home ownership

Although it is regularly assumed that all Germany’s hard-working citizens are striving hard to buy their own property, a new – perhaps surprising – study from Interhyp, one of Germany’s largest private mortgage facilitators, shows that attitudes have been shifting perceptibly over the past year.

Although two-thirds of those paying rent would ‘like’ to own a house or an apartment one day, the study shows that over the past twelve months the number of those expressly wishing to own property has fallen by 10%.

While in 2018 76% of respondents said they dreamed of becoming property owners, the “Wohnraumstudie 2019” study carried out by Interhyp among 2,600 respondents showed that number falling to 66%. Of which 38% conceded that they would not have the financial resources in the first place to be able to buy.

The dream of private property ownership is at its highest between the ages of 18 and 39. Within that, only 15% of the 18-29-year-olds said they would prefer to rent. Every tenth respondent said they would like to own property ‘soon’. 63% of Germans dream of a detached house with land, while only 19% of respondents said they wanted to live in a big city, 24% in the suburbs, and 32% in a small or mid-sized town.

Ongoing low interest rates, rising rents and property prices – What are the main reasons for buying? Respondents gave as reasons: security for their old age (91%), freedom from paying rent (95%), and more scope for planning their own environment (92%). The low level of interest rates was a reason for buying for 81% of respondents, 87% were motivated by the rising demand for housing, while 84% felt a sense of compulsion while they believed prices in their areas would continue to rise.

33% said they were worried that in a few years they would be unable to pay even higher rents, hence the argument for buying. Those living in the big cities were most afraid of this (82%), while in the small to mid-sized town this affected only 73%, and in rural areas only 59%.

The Interhyp study shows that of those living as tenants in multi-family homes, 78% declared themselves ‘satisfied’ with their living situation. 64% were happy with the building quality of their accommodation, while 69% found the level of their living expenses acceptable.

Only 37% of the 2,600 respondents said they would be happy to move, about the same as last year (36%). A majority (53%) of those who had been looking for a place to rent or buy in the past two years described the experience as ‘stressful’. In 2017 and 2018 the corresponding figure was 39%, says Interhyp.

The relative satisfaction of tenants with their living situation can be partly explained, say the authors of the report, by the comfortable sizes of their current accomodations. The average German lives in a dwelling with 101.6 sqm and 4.3 rooms. 48% of respondent said they would like to have solar power and energy-saving insulation, but only 8% of the population actually do, about the same as those with smart-home systems.

Although all this may seem a bit obvious, it’s clear that many of Germany’s market researchers are committing quite a few resources to understand potential buyers’ motivations, or sticking points. A representative survey from German internet comparison site Check24 carried out by researchers YouGov more or less confirms the Interhyp conclusions above. 

The most important reason for buying is security in old age, according to Check24. Hence it’s no surprise that of the under-25’s, even the record low interest rates can interest only 12% to buy property. At age 55, more than a third of those surveyed said low interest rates was a compelling enough reason to take the plunge, while a fifth said they had already found a suitable house or an apartment which they had bought, or were preparing to buy.

Given the ECB’s low interest policy, a property mortgage fixed for ten years can be got for 0.69% on average, while fixing for 15 years costs 1%. A loan fixed for 20 years would cost 1.2%, although this can vary anywhere from 0.93% to 1.56%.