The desire for home ownership remains strong in Germany: according to a recent forsa survey commissioned by LBS Bausparkassen, three out of four Germans who do not yet own property would like to live in a home of their own. This is a positive sign for the residential property market, as demand for home ownership remains strong higher financing costs and stricter equity requirements. The survey results were presented at this year’s Bauspartag, which was covered by, among others, Immobilien Zeitung and the Association of Property Managers in Germany.
The survey highlights the significant gap between aspiration and implementation: only around one in four people who dream of home ownership are currently planning a purchase. The views of the younger generation are particularly telling: 86 per cent of 20- to 49-year-olds are convinced that home ownership is harder to achieve today than it was just a few years ago.
Once again, the lack of equity continues to be one of the main obstacles. According to figures from building societies, only around six per cent of younger renter households now have sufficient savings to finance a typical property in the area where they live. Accordingly, building societies are calling for relief on land transfer tax for owner-occupiers, as well as stronger incentives for building up equity, for example through an enhanced housing construction subsidy.
Furthermore, the issue of home ownership is also gaining further significance in the context of private retirement planning. Overall, people today are more concerned with their financial security in old age than they were a few years ago. Many are aware that they must make financial provisions for retirement themselves and that an owner-occupied property can play a central role in this. At the same time, the figures show just how urgent the need for action is: 42 per cent of households with a monthly net income of more than €4,000 fear they will not be able to maintain their standard of living in retirement. For households with a net income of less than €2,500, this figure rises to as much as 70 per cent. However, it is precisely these groups that often have limited opportunities to save, which makes building up equity even more difficult.
These findings are particularly relevant for markets such as Berlin and the surrounding region. Especially in places where rental properties are scarce and rents are high, buying a home remains an attractive prospect for many households, not least as part of their retirement planning. At the same time, high transaction costs and equity requirements mean that some of the demand is increasingly shifting to the surrounding areas, where purchase prices are often lower than in central Berlin locations.
“The survey shows that the desire for home ownership has by no means disappeared – quite the contrary. This is an important signal for the market,” says Jacopo Mingazzini, CEO of The Grounds. “We continue to see considerable potential for demand, particularly in Berlin and the surrounding areas. The key now is to reduce equity requirements, for example by offering relief on land transfer tax for first-time buyers. Then the stable desire for home ownership can once again be converted into tangible demand more frequently.”
