In Germany, it is More Attractive to Take a Loan Than to Rent

In Germany, it is More Attractive to Take a Loan Than to Rent

Recently, the Homeday company has published the results of a study of the real estate market in Germany, which aimed to determine how long Germans have to work to save up for housing. Residents of large cities like Berlin, Frankfurt, and Munich will have to put money aside for a longer period.

As an example, the researchers took an apartment of 75 square meters and the average salary of residents. In relatively small cities, people will be able to earn on such housing in two or three years, but in the three megacities with the highest real estate prices they will have to work five times more (ten or eleven years). Today the highest prices for housing are in Munich. The cost of an apartment of 75 square meters is about half a million euros. If one compares the purchasing power of the residents it turns out that they will have to bank for 11 years. In Frankfurt – 9 years, and in Berlin – 8 years and 4 months.

For residents who want to take a loan for housing, IWD organization experts have calculated that taking a mortgage in Germany is cheaper than rent. This is due to the fact that today the terms of such loans are the most profitable for the last 70 years. If before one had to pay at least 5% per year for a mortgage loan, nowadays this percentage is only 1.67. However, such favorable conditions have the opposite side: due to the growing demand, the prices for housing began to rise sharply.

For correct determination of the benefits of buying a house, IWD researchers compared the cost of buying and renting prices of housing in 400 districts of Germany. The experts analyzed how the real estate and rental market is developing as well as the level of interest on loans. Thus, they came to the conclusion that the residents of Germany are more profitable to buy an estate on credit.

For those who are going to live in Germany for a long time, buying a house would be the most profitable, For example, if you take such mortgage for 35 years, you will spend almost 30% less compared to the cost of renting for the same period.

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