How can people still afford to live?

Home ownership study: who can still afford a house in ten years?

According to the new LBS home ownership study, it will remain difficult for German households to make the leap into their own four walls until 2030. Read here why this is the case and how the general conditions - such as demographic changes, construction costs and building land prices - will develop over the next ten years.

Home ownership study: who can still afford a house in ten years?
Home ownership study: who can still afford a house in ten years?

"Create, create, build a house" - most Germans are probably familiar with this Swabian motto. But the dream of owning a home only actually comes true for very few. In the past ten or twenty years it has become increasingly difficult to build or buy a home. The demand for residential property and building land is unbroken and has even gained momentum in the wake of the Corona crisis: Around 57 percent of tenants would prefer to live in their own home, but 62 percent currently feel that property prices are too high, as you can see in our article " How Corona affects our living preferences ”. No wonder: the supply of building land has become scarce in many regions and younger families in particular lack the necessary equity.

Only 42.1 percent of Germans live in their own home - less than in any other EU country. That will not change in the next ten years either. This is the result of a current study by empirica and LBS Research. A slight increase in the home ownership rate to 43.6 percent is expected by 2030.

Why has it become so difficult to buy your own home?

Different generations have had and have different chances of buying property. So this was relatively easy for the post-war generations in West Germany. The proportion of 70 to 79-year-olds in their own house is correspondingly high today: 58 percent in the west, but only 36 percent in the east. Here, the historical backlog in terms of home ownership in the last few decades has been made up, which has benefited the quota. Between the Baltic Sea coast and the Thuringian Forest, there are more unfulfilled housing requests and better chances of making this a reality - benefiting above all from the fact that more affordable building land is available. This catch-up effect would be the reason if the home ownership rate even rose by 2030. Because if the conditions remain the same, nothing more will happen in the West.

Demographic changes also play a role

Whether east or west: the next generation is finding it increasingly difficult to go from tenant to owner. While in 2008 it was still 34 percent in the east and 37 percent in the west, the leap into owning a home was only achieved in 2018 by 25 and 30 percent of thirtysomethings respectively. The main failure to acquire property is that the savings and thus the equity of many new families have not kept pace with the skyrocketing real estate prices.

According to LBS Research, the changed living conditions also play an important role in this development: More and more young people are striving for a higher professional career, which is why they move from the country to the city and stay there to work. The more the metropolitan areas prosper economically, the more expensive the cities in Germany become. Own real estate is becoming almost unaffordable and living for rent is becoming a common alternative. Some cities, such as Cologne, Krefeld and Hamburg, are even thinking about stopping the construction of single-family houses and switching entirely to multi-family houses and rental apartments in densely populated areas.

Also, because of their careers, many young people have long-distance relationships and only later start families - if at all. Single households, however, have a much more difficult time finding house financing. Logical consequence: If (and where) more people live alone, property formation is stuck.

What can the state do?

LBS Research derives several political conclusions from the study results:

  • Families still need support to enable children to live as sheltered as possible in the safety of their own house or at least their own apartment. The corona crisis has shown how important having your own garden is for a work-life balance.
  • The Baukindergeld was the right support approach and deserves a new edition in the coming legislative period to make it easier for young families to buy real estate.
  • Not only the house costs, but also the ancillary construction costs have risen above average and require even more equity. To counteract this, an exemption for first-time buyers and first-time builders can be considered for the property transfer tax.
  • You can only build up equity to buy a house if there is still something left over besides the rent. Apartments in particularly popular swarm cities should therefore become affordable again. The rent brake is one way. However, there is no getting around sufficient new construction. The building land mobilization law currently being discussed in the Bundestag can help to provide more space in the future.
  • The currently still more affordable property acquisition in the surrounding area can use a boost in attractiveness: Better transport connections, the rapid expansion of clean and punctual local public transport, as well as high-speed cycle routes that are as free of intersections and traffic as possible would contribute to this.
  • In order to stop the rural exodus, coordination and distribution of tasks between villages, anchor towns and regional centers should be more successful.

The background to the study

Every five years the Federal Statistical Office carries out the sample income and expenditure (EVS) in around 60,000 private households. This makes it the largest representative survey on a voluntary basis within the EU. Since the beginning of the 1960s, she has been questioning participants about their living conditions, assets and income. On behalf of the LBS, the research institute empirica regularly derives study results with regard to the development of regional housing and property conditions from the survey focus on the housing situation and housing costs.