It could be so nice, in your own house, in your own apartment: Never pay rent again, have something of your own, with enough space for life and maybe even work, possibly with a garden or your own space for hobbies. A dream, maybe. But one that is becoming increasingly unreal.
Only six percent of Germans are planning to build or buy a property this year – just half as many as ten years ago. This shows a representative survey commissioned by the building society BHW, which is available to the SZ. The boom in the housing market has apparently come to an abrupt end not only on construction sites, but also among brokers – although purchase prices are now tending to fall, while rents are continuing to rise, especially in and around the big cities.
The fact that fewer and fewer people are financing their own property has been apparent for a few months. Demand for housing loans fell in the fourth quarter more than at any time since the data was first collected in 2003, it was recently reported the Federal Bank with. The fact that so few people actually imagine having their own house or apartment at all is likely to exacerbate the crisis.
And it’s not just buying that seems increasingly absurd, the eagerness to renovate is also clearly decreasing: According to the survey, only 14 percent are planning an energy-saving renovation this year – also only half as many as a decade ago. The energy consumption of the buildings urgently needs to be reduced in order to reduce ongoing heating costs and to achieve the climate targets. The federal government had specifically changed the funding for this: significantly less for new construction, but more for renovations. But that too seems to be fizzled out.
Loans have become increasingly expensive in the past year. If there was private construction financing with a ten-year fixed interest rate at the beginning of 2022 for an average of one percent interest, the value rose to a good four percent by autumn. Things have gone up and down since then – but hardly anyone believes that loans will soon become seriously cheaper again, on the contrary: it was not until the beginning of February that the ECB raised its key interest rate to three percent, together with the announcement that it would be in March to go up another half a percentage point. He therefore expects “interest rates for construction financing to rise,” says the head of the credit broker Dr. Klein, Michael Neumann.
Many want the villa, hardly anyone the terraced house
“The turnaround in interest rates means that not everything can be financed, especially if there is no equity,” says BHW boss Henning Göbel. And then apparently many give away the money from the state. According to the survey, funding is only planned for around every fifth potential purchase and every fourth planned refurbishment. And the purchase prices? They are falling – but not enough to offset the higher cost of the loan. Current data shows that residential real estate prices fell by an average of 1.8 percent between the third and fourth quarters – but over the course of the year prices rose by at least 2.1 percent. The Association of Pfandbrief Banks expects prices to fall further in the near future – “albeit at a moderate level overall,” says General Manager Jens Tolckmitt. And even if real estate were 15 percent cheaper, you would be “at the price level of the beginning of 2020”.
And at least one thing has not changed: for half of Germans, the dream house per se remains the detached single-family home. That is “by far the most expensive and least sustainable option,” says BHW boss Göbel. Still, only six or five percent want a semi-detached or terraced house, even if they were significantly cheaper. Who dreams of living wall to wall with their neighbors?