Challenges in the German Real Estate Market
The German real estate market is facing significant challenges that prevent many families from affording their own homes. High construction costs and rising purchase prices are just some of the factors burdening buyers.
High Prices and Limited Selection
With a budget of under 500,000 euros, only construction sites or undeveloped plots are typically accessible. The increasing construction costs and high property prices severely restrict the selection.
Regional Differences
Real estate prices vary dramatically by region. In expensive cities like Munich, one can only acquire a small 66-square-meter apartment for 500,000 euros, while in more affordable regions like the district of Gotha, a house with 310 square meters can be purchased.
Construction Costs and Interest Rates
High construction costs and rising interest rates are decreasing construction activity. In 2022, building permits declined, increasing pressure on the housing market.
Impacts on Saving Behavior and Investment Decisions
Saving Behavior
Many Germans must adjust their saving behavior to finance the dream of owning a home, which requires longer saving periods or alternative financing models.
Investment Decisions
Due to high prices, many potential buyers prefer renting over buying or seek more affordable locations. Regional flexibility can be advantageous due to local price differences.
Forecasts and Developments
Experts predict a decline in real estate prices of about 8 percent by 2025. However, in some cities, rental and purchase prices continue to rise, depending on local demand.
In summary, the immense costs in the real estate market burden many families in Germany, necessitating regional flexibility and adjustments in saving to realize the desire for home ownership.