Majoritarian German savers think that self-used real estates are the best instrument to wealth creation. 54 percent support this opinion as a representative survey from the German Savings Banks Association, short DSGV, states. 1 With a little gap, security instruments like share-, investment- or real estate funds (28 percent), external used real estates (27 percent) and rent- as well as life insurances (each 24 percent) follow up. Thereby the preferences of Germans have changed significantly in the past 10 years. In 2007 life insurances were favored as investment form by two-thirds and self-used real estates were only considered by 27 percent as a good type of investment.
However, the willingness of young Germans to purchase property decreased during the past years. According to the survey, only 38 percent of the 20- to 29 year old intend to buy property. One year ago this figure was still at 53 percent. Only 21 percent of the 30 – 39 year old plan on purchasing property (in 2016: 34 percent). The purchase intention of both age groups decreased even though its popularity rose on a ten years comparison.
Barriers to entry are too high for first time purchasers
The observations of the DSGV-survey cover the results of the current ACCENTRO-IW-Housing Cost Report. According to this, home ownership is due to low interest rates very affordable and in many places it’s even cheaper than renting. In contrast the barriers to entry are too high, so many young households don’t have the possibility to purchase home whereby the number of first time buyers decreases. Especially the high equity capital requirement is a huge problem as many households are not capable of raising sufficient amounts. The higher capital needs are on one side caused by rising real estate prices and on the other side by the German states increased property transfer tax.
The ACCENTRO-IW-Housing Cost Report states due to the mentioned reasons that the average first time purchaser in cities is about 48 years old and the number of kids in the household is sinking. Older double income households without kids are switching from being renters to moving into their own homes. But home ownership is far more important for youngster’s private pension plan. The intention of young people is there as the current survey of the German Savings Banks Association states. The conclusion of the ACCENTRO-IW-Housing Cost report therefore is that politics should take responsibility of lowering the barriers to entry home ownership.