Property prices in German metro areas have experienced a steady upward trend over the past few years. Nonetheless, Germany remains one of the few industrial nations worldwide where property prices are more affordable now than they were 20 years ago. This is the upshot of the Affordability Index published by Kreditvergleich.net, an online rating service for bank loans. The index shows the financial leeway that property buyers continue to have in Germany. It traced the price trend in German real estate between 1975 and 2016, and matched it with the performance of net wages in the country over the same period of time. The affordability index covers a total number of 22 countries on five different continents. The survey findings suggest that only in five of these 22 countries are property prices more affordable than 20 years ago. As far as Germany goes, the index found that property prices have increased by an average of 26.25 percent since 1995, whereas the average net income has gone up by 105.65 percent over the same period. The widening gap has made homeownership effectively more affordable for a large part of the German population.
Low Interest Level Makes Homeownership Affordable for Many Households
The sustained low-interest cycle has also boosted the affordability of real estate, and this despite rising property prices. Since financing rates are still at rock bottom, homeownership has become attractive even for households that could not have afforded a building loan a few years back. Financing experts expect the enormous demand for residential real estate in Germany to persist for some time yet. So buying a home will continue to pay off financially since Germany's demographic trend will keep driving up the need for residential accommodation in the coming years. Moreover, mortgage financing is easy to obtain for home buyers in 85 percent of all German counties and corporate cities, and this includes average income levels. A recent Postbank survey reached the same conclusion, suggesting that the majority of Germans could actually afford homeownership today.