Buying a home is becoming increasingly difficult for young people in Germany. This was reported by Tagesschau on December 17, 2025, as well as numerous other media outlets, citing a recent study by the Kiel Institute for the World Economy (IfW). According to the study, fewer and fewer young people are able to make the leap into home ownership, and millennials have to save for almost 14 years to build up the necessary equity. That is about twice as long as baby boomers had to save to buy property in the 1980s.
At that time, 1.7 times the average annual household income was sufficient as equity capital for the purchase of a condominium, according to the authors of the study. Today, however, more than three years’ salary is required. In the past, a good three and a half years’ salary was needed to buy a house. After seven times the annual income was required at the peak of the recent real estate boom, potential home buyers still have to reckon with more than five times their annual income.
The authors of the study see the sharp rise in equity requirements as the main reason for this, which is primarily attributable to the real estate price boom of recent years and higher real estate transfer taxes. In contrast, the monthly burden of interest and principal payments plays a lesser role. Although millennials spend around 25 percent of their income on their mortgage, baby boomers also spent around 20 percent.
Due to the sharp increase in equity requirements, more and more people are relying on support from their families when buying real estate, and it is increasingly dependent on gifts and inheritances as to who can still afford to buy their own home, the study concludes. This is a problem for intergenerational justice and social mobility, which should be counteracted by lowering the barriers to entry, for example through a reduction in real estate transfer tax.
“Promoting home ownership is an important political task in Germany and is even enshrined in the state constitution in Berlin,” says Jacopo Mingazzini, CEO of The Grounds. “Anyone who takes this task seriously should ensure that the real estate transfer tax is reduced in the near future, at least for first-time buyers of owner-occupied residential property.”
