Owner-occupied housing not only offers individual benefits but can also make an important contribution to society: it increases housing security, supports long-term wealth accumulation and improves financial security, particularly in old age. This is the conclusion reached by the latest study, ‘Social Aspects of Home Ownership’, which was carried out by the Pestel Institute with funding from the Schwäbisch Hall Foundation ‘bauen-wohnen-leben’. The findings have attracted widespread media attention in recent days. DIE ZEIT, n-tv and Tagesschau, among others, have reported on Germany’s exceptionally low home ownership rate compared with the rest of Europe.
According to the study, the advantages of home ownership become particularly clear when looking at housing costs in old age. In 2025, around 85 per cent of owner-occupiers with debt-free properties had housing costs amounting to less than 25 per cent of their income. Among owner-occupiers still repaying a mortgage, the figure was around two-thirds. By contrast, among households paying market rent, only just under 59 per cent achieved this low cost-to-income ratio. In addition, in 2022 almost 90 per cent of owner-occupier households aged 65 and over were already living in a debt-free property. The authors therefore regard home ownership as an important component of private retirement provision.
The study also highlights positive effects on wealth distribution. Home ownership enables even middle-income households to build up wealth over the long term and can thus help counteract the concentration of wealth. Added to this are a high level of housing security and greater freedom to personalise one’s home, as well as positive effects on the stability of neighbourhoods. Owner-occupiers often remain in one location for a long time and, on average, report higher levels of satisfaction with their housing than tenants.
Against this backdrop, the Pestel Institute takes a particularly critical view of the trend in home ownership in Germany. According to its calculations, in 2025, only around 43.5 per cent of private households own their homes. This puts the rate at its lowest level in around two decades. The problem is particularly pronounced among younger people: almost three-quarters of 25- to 45-year-olds live in rented accommodation. By European standards, Germany is also among the countries with the lowest home ownership rates.
The study identifies the economic and political conditions as key factors behind this trend. It notes that the cost of building homes has risen by 160 per cent since 2000, whilst consumer prices have increased by only 64 per cent. At the same time, support for home ownership, once significantly more extensive, has been largely scaled back. The institute is particularly critical of the decision to abolish ‘Baukindergeld’ (child-related housing subsidy) in 2021. A subsequent evaluation showed that the support programme was particularly effective in reaching low- and middle-incomes families with children. The study therefore concludes that the current framework conditions disadvantage owner-occupied housing compared with investment in rental properties.
This trend is particularly relevant for Berlin. The study shows, in general terms, that home-ownership rates fall as urban density increases, and that large cities therefore have particularly low rates. At the same time, the home-ownership rate has risen in many regions of eastern Germany since 2011. This presents an interesting opportunity from a housing policy perspective, particularly for Berlin and its surrounding areas: greater support for home ownership could not only enable households to build up their wealth, but also ease the pressure on the rental housing markets by enabling current tenants to move into homes of their own. The authors expressly point out that a failure to move into owner-occupied homes places additional strain on the already strained rental markets.
“The study makes it clear that increasing home ownership is about much more than simply promoting the property market. It enables wealth accumulation, improves financial security in old age and can, at the same time, ease pressure on tight rental markets. In Berlin and the surrounding area in particular, there are many households for whom buying an apartment or house of their own could, in principle, be an attractive option. Policymakers should therefore consistently reduce the barriers to home ownership, for instance by cutting transaction costs associated with buying a home – for example by reducing real estate transfer tax – by ensuring reliable subsidy conditions and, above all, by creating framework conditions that once again enable the construction of more affordable housing,” says Jacopo Mingazzini, CEO of The Grounds.
