17 04 2018


Berlin, Cologne, 17 April 2018 – Living in property you own remains significantly cheaper than renting. This year’s “ACCENTRO-IW Cost of Living Report” shows that the costs for owner-occupied accommodation are around a third lower than renters’ costs across Germany. The general conditions for acquiring residential property remain excellent. The study is based on national rental and owner-occupied costs in all 401 administrative districts and cities in Germany. The study was carried out by Prof. Michael Voigtländer at the German Economic Institute in Cologne (IW) on behalf of ACCENTRO Real Estate AG.

Jacopo Mingazzini, CEO of ACCENTRO Real Estate AG, said, “Despite the great advantages compared to renting, the level of ownership in Germany remains very low. This is not least due to the great obstacles that must be overcome to get on the property ladder. Young people in particular are prevented from acquiring property due to the high amount of equity required. And this at a time when investing in property is becoming increasingly important for retirement planning. We believe the government must help people get onto the property ladder.”

Across Germany, costs for owning are significantly below costs for renting

The costs for owner-occupied accommodation have fell continuously since 2008. They have only begun to rise slightly again over the last two years. Nevertheless, the cost of living in an owner-occupied existing property is 32.7 per cent lower nationwide on average than renting a comparable existing residential unit. In many districts, it is cheaper than renting even once repayments have been taken into consideration. This gives owners even more opportunities to concentrate on their provisions for retirement. Despite continuously rising prices in the German metropolitan regions, the cost advantage of owner-occupied accommodation compared with renting in the seven largest cities in Germany remains slightly above the national average at 33.2 per cent. Living in property you own is particularly advantageous in Frankfurt and Hamburg. The fluctuation in the cities lies between 26.4 per cent in Stuttgart and 38.6 per cent in Hamburg.

Early acquisition of property particularly beneficial

Despite the clear cost advantage of owner-occupied accommodation compared with renting, there seems to be no clear effect on demand. The rate of home ownership remains very low. Private households can benefit even more when they acquire property early and therefore make repayments over a longer time period. Young households could make a real difference to their retirement plans if they finish repaying a mortgage before they retire. “We’re facing a great challenge in this respect at the moment: young people only rarely have the means of meeting the equity required,” observes Jacopo Mingazzini.

General conditions for acquiring residential property remain excellent

One aspect in favour of buying at the moment is the currently low mortgage rates. “Because the rates are expected to remain low, we believe this advantage will remain applicable for some time,” explains Prof. Michael Voigtländer from the German Economic Institute. “The best time to buy may have passed, but in comparison to renting, buying remains significantly cheaper. Even moderate increases in the interest rate would not significantly lower the cost advantage of owner-occupied accommodation.” The study shows that with an interest rate increase to 3.5 per cent and a total financing period of 35 years, the costs of paying interest, repayments and maintenance would remain below the cost of renting in the majority of regions, in some cases by as much as 30 to 40 per cent.

A need for new incentives to build up assets

“The government’s child building allowance may help to reduce the problem of equity, but it is far too expensive. Other plans, such as sureties or property transfer tax reforms would be much better suited to help a broader range of people get onto the property ladder,” declares Prof. Michael Voigtländer. “The ongoing low rates of interest remain an opportunity to stimulate the build-up of assets in Germany. It is now up to the politicians to create the right framework conditions for this to happen,” adds Jacopo Mingazzini.

About ACCENTRO Real Estate AG

ACCENTRO Real Estate AG, listed on the stock exchange, is the market leader in residential privatisation in Germany. ACCENTRO generates additional revenues through portfolio sales and marketing apartments for institutional investors and project developers. In addition to its home market of Berlin, the company concentrates on metropolitan regions such as Hamburg, Cologne, Dusseldorf, Rhine-Main region, Leipzig, Hanover or Bonn. ACCENTRO Real Estate AG is listed in the Prime Standard of the Frankfurt Stock Exchange.

About the German Economic Institute, Cologne

The German Economic Institute in Cologne is a private economic research institute, committed to a free economy and society. The German Economic Institute in Cologne is a registered association. Members include around 110 business and employer associations in Germany and individual companies. Project partners primarily include foundations, associations and public institutes.

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