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Housing in Germany: Why are fewer young people buying their own homes?

The number of young people buying homes in Germany is falling. So who is buying property – and where?

Published: 9 August 2019 13:48 CEST

Housing in Germany: Why are fewer young people buying their own homes?

Homes in Stuttgart, Baden-Württemberg, where home ownership is most common in Germany. Photo: DPA

Home ownership in Germany has remained at around 45 percent since 2010, but there are changes in who is buying properties.

Fewer young people are buying homes and there's a significant drop in first-time buyers, while older people continue to purchase property, according to a new study by the Institut der deutschen Wirtschaft (IW) in Cologne on behalf of the Bausparkasse Schwäbisch Hall.

The IW found the home ownership rate for 25-34 year olds in Germany has fallen from 17 percent in 2010 to 12 percent in 2017. At the end of the 1990s, that figure was much higher at 23 percent.

Meanwhile, the home ownership rate has also dropped by five percentage points between 2010 and 2017 in the 35-44 year olds age group.

During the same time frame, the proportion of 65-74 year olds who own their homes rose by two percentage points to 58 percent.

The study also found the number of self-employed people buying homes has gone up, while less civil servants are entering the property market.

Why are some people not buying homes in Germany?

Researchers said the downward trend in some categories could reflect changing demographics in Germany due to increased migration, especially around 2015 during the height of the refugee crisis.

Or it could be down to the fact young people are choosing to study longer and that means they are entering into the job market later in life “which could lead to a later purchase of residential property”, the researchers said.

It's also difficult for people, especially younger generations, to save enough money to get a foot onto the property ladder in the first place.

Banks now demand a higher deposit to secure a mortgage while purchase prices are rising steadily. In some cases, these prices are simply too high for potential homeowners to afford.

Homes in Brandenburg. Photo: DPA

That's shown in the significant drop in first-time buyers. Between 1998 and 2002, the number of first-time buyers was still at a level of around 700,000 households per year in Germany. But in 2016 and 2017, there were fewer than 400,000 households per year – about 1 per cent of all homes.

However, buying a home is an attractive option (if you can save the money beforehand) due to low interest rates. And it could pay.

The household income of those who moved from a rented home to their own property has increased. In 2010, the average net income was €3,000 euros and in 2017 it was just under €4,000.

Where do people buy homes in Germany?

In rural parts of Germany, the ownership rate is higher than in urban regions. In 2017, more than half (51.1 percent) of households in rural areas lived in their own home. In the cities, that number was 42.8 per cent.

The highest home ownership rate of all Germany's 16 states in the latest figures from 2017 is in Baden-Württemberg. Just over 54.4 percent of all households live in their own property in the wealthy southern state.

It’s closely followed by Lower Saxony which has a 54 percent rate.

In eastern Germany, the home ownership rate remained below the German average of about 45 percent.

Berlin has by far the lowest home ownership rate with about 18 percent.

In a Europe-wide comparison, Germany ranks second last when it comes to property ownership – Switzerland is the only country where fewer people buy property.

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10 essential tips for avoiding rental scams in Germany

When it comes to settling in Germany, one of the most stressful and difficult tasks you’re likely to face is finding a place to live.

With the country in the grip of an ever-worsening housing shortage, there aren’t enough rental properties to meet the high demand – especially in big cities like Berlin, Munich and Frankfurt – and the flats that are available can often stretch even the most healthy of budgets.

With renters desperate to find affordable homes, crafty scammers have seized the chance to place fake ads on the market, often in dream locations with lower-than-average rents.

While some of these scams may be easy to spot, others can be highly sophisticated, with fraudsters setting up professional-looking websites and even allowing hopeful tenants to view their properties in person.

Recently The Local reported on a Polish couple who lost around €7,000 through a rental scam in Berlin. The scammers had sublet a beautiful Altbau apartment in the popular district of Neukölln and created an advert for it via a fake letting agent website, then arranged for people to use a key box to view the property while the real tenants were away.

Despite checking the contract over with legal experts from their local tenants’ association, nobody saw anything out of the ordinary – that is, until they tried to access the apartment and found a family already living there.

So, how do you protect your hard-earned savings and steer clear of scammers while looking for a new home?

Here are 10 important ways to protect yourself from rental scams.

1. Be alert to suspicious signs

The key to avoiding scammers in Germany is to be fully clued up on the warning signs. Was the listing for the property uploaded in the middle of the night, is the advert thin on details or written in bad German or English, and does the offer feel too good to be true?

Though it would be nice to believe there are still cheap flats to be found, finding an attractive property at an overly reasonable price is usually a red flag.

Hamburg

Modern apartments in Hamburg. Photo: picture alliance/dpa | Daniel Bockwoldt

If someone claiming to be a landlord contacts you out of the blue, that’s also your cue to run a mile. With so many people looking for housing, most letting agents and landlords will have more than people looking to rent their properties without needing to get in touch with people themselves. Anyone who does is more than likely to be a scammer.

2. Rule out landlords who say they live abroad

One of the major warning signs to look out for is a landlord who claims to be renting the property from abroad, or who says they are out of the country for other reasons, like a last-minute business trip.

That’s usually a scammer’s way of excusing the fact that they won’t be able to meet you personally or even show you the property before you rent it.

“When the country the landlord lives in appears then I would say there’s a really big chance this is a scam,” said Kuba Rudzinski, one of the victims of the Berlin-Neukölln rental fraud.

Even if the excuse seems plausible, your best bet is to ignore anyone who tries to sell you a story about living abroad and simply move on with your house hunt.

3. Do your research online

Before committing to anything, take time to do some thorough research to scope out the property, landlord and letting agent.

Running the pictures and text used in apartment listings through a search engine like Google will help you quickly identify stock photos and text stolen from other listings. For pictures, this is known as a reverse image search.

A laptop

Photo by 2H Media on Unsplash

It’s also worth checking that any websites you’re sent to are fully functional and not copies of other letting agent sites, and that any email addresses match the website domain.

4. Visit the property and ask around

Never agree to rent a property without seeing it in person first. Arrange a viewing and take the opportunity to ask questions about the property and the neighbourhood.

Kuba also recommends speaking with the neighbours in the building to check if the property is genuinely being rented.

“Go to the place before and ask the neighbours, is this flat really for rent? Because these people generally know,” he said. “You’ll need to convince yourself to do it of course, but just ask in the building, ask on the floor where the flat is.”

5. Don’t transfer the full deposit in advance

Advance payments for anything, whether it’s furniture, a deposit or getting a chance to view the property, should be considered a major red flag.

Under German law, you are usually only expected to pay the deposit by the start of the agreed rental contract – and certainly not several months in advance.

Euro notes lie next to some house keys on a table.

Euro notes lie next to some house keys on a table. Photo: picture alliance/dpa/dpa-tmn | Andrea Warnecke

You are also legally entitled to pay your three months’ deposit in three instalments on top of your first three months’ rent after moving in, so definitely be cautious of landlords that place pressure on you to transfer a large lump sum.

If you’re really concerned, look into alternatives for paying your deposit, such as Kautionversicherung (deposit insurance) or a Mietkautionssparbuch, where you open a bank account and pledge the amount to the landlord, rather than transferring the money directly.

6. Insist on meeting the landlord or letting agent in person

If a landlord or letting agent refuses to meet you in person or insists on conducting all communication online, they’re probably not who they say they are.

Insist on meeting face-to-face to verify their identity and ensure they have a legitimate connection to the property.

7. Avoid sending documents straight away

Not all rental scams are about getting money from you directly: many scammers are simply after your personal details for the purposes of identity theft.

Be wary of providing personal documents or sensitive information before you’ve verified the legitimacy of the rental agreement, especially when it comes to things like passport scans or other forms of ID.

8. Seek legal advice from experts

If you’re unsure about any aspect of the rental agreement or if something seems suspicious, seek advice from legal experts or tenants’ associations.

However, be aware that this isn’t always a cast-iron guarantee that a tenancy is legitmate. Over the past few years, fraudsters have become increasingly sophisticated, even down to producing water-tight rental contracts for would-be tenants.

An estate agent hands over keys to an apartment. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

According to civil lawyer Emilia Tintelnot, becoming a member of a tenants’ association can be a good way to get affordable legal advice, and it can also be helpful to set up legal insurance to ensure you can access help when you need it without having to pay lawyers’ fees up front.

9. Be wary of stereotypes

Avoid making assumptions based on stereotypes or preconceived notions about someone’s gender or nationality, as this may cause you to overlook things you might otherwise see as warning signs.

In Kuba’s case, the fact that the fraudsters were German made them appear more legitimate in his eyes, as Polish people tend to see Germans as law-abiding and trustworthy.

Be aware that scammers can come from any cultural background and may use a variety of tactics to deceive unsuspecting renters.

10. Keep an extensive paper trail

Document all communication, agreements, and transactions related to the rental process, including phone numbers and any bank details provided.

According to the Berlin police, this type of evidence can be crucial for an investigation if you do suspect a scammer.

While evidence can differ across cases, “pictures, contact details used by the perpetrators, original documents, bank details with payment receipts” are particularly helpful for investigators, and could help the police stop the scammers for good.

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