
Most Germans don’t buy their homes, they rent - allerhellsten
http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/
======
cm2187
So in Germany, the interest on a mortgage is non tax deductible. The article
doesn't mention it but I understand that property owners are also liable for
capital gain tax if they hold the property less than 10 years.

I think that makes sense. There is no reason to favor individuals investing
into an unproductive investment (property) over productive investments (stocks
and bonds, which enable companies to raise money to start new projects, create
jobs, etc). Over-borrowing to bid the maximum amount one can to buy a
nineteenth century house doesn't create any job for anyone, it just transfers
wealth to the hands of the seller.

~~~
riprowan
> There is no reason to favor individuals investing into an unproductive
> investment (property) over productive investments (stocks and bonds).

I beg to differ. I think that real estate, like farming, has critical societal
benefits that are worthwhile to develop and maintain.

Namely, it is very difficult to raise a family of four in a mutual fund.
Investing in a home may is absolutely "productive."

See, there are significant societal benefits to home ownership that you are
not considering. For example:

1\. A paid off home is a social safety net against homelessness for an entire
family and many of their social circles. Even if all of them are unemployed,
all of them have a roof over their heads.

2\. A paid-off home frees up cash flow. It allows the owner to divert his
earnings into other activities or investments or reduce the amount he has to
earn monthly.

3\. Real estate can be borrowed against. Try that with stocks. If you are an
entrepreneur, your home is likely the asset you will use to acquire bank
financing for your business.

4\. With unskilled / low-skilled jobs vanishing left and right, homebuilding
is one of the few markets which still relies entirely on a giant low-skilled
workforce. It's one of the few sectors that can keep a lot of people
productively employed. I think there are valid arguments against stimulating
homebuilding to reduce unemployment among low-skill workers, but there is
nevertheless a societal logic here.

5\. In a time when wealth is centralizing as never before, investments in real
estate distributes wealth locally. I think there are valid arguments against
public policy to distribute wealth, but there is a societal logic here.

6\. Finally: taxing a home is very counterproductive to the well-being of the
middle class and the poor. I'm sure in Germany the interest on a mortgage
isn't tax deductible as you say, but I'd also guess that steps are taken to
refund the property taxes for the lower classes. Otherwise you simply tax the
poor out of their homes - a form of confiscation.

I think there's a lot of sense in _NOT_ taxing one's first home, at least not
if it's below a certain reasonably high value. All things considered, home
ownership is empowering. A second home or income-generating rental property is
a different story, but one's domicile should be unconfiscatable by the state.

~~~
cm2187
> _Namely, it is very difficult to raise a family of four in a mutual fund._

It is difficult to ski without skis. But most people don't buy skis, they rent
them. Renting skis do not mean that no skis will be manufactured. There is a
need for house, houses will be constructed, irrespective of whether people
will over-bid on them or not.

> _A paid off home is a social safety net against homelessness_

Stocks and savings are equally a safety net against loss of primary income.

> _Real estate can be borrowed against_

Borrowing against your home to finance your business is no different than
selling some stocks to invest into your business. In both cases you are using
previous savings.

> _I think there 's a lot of sense in NOT taxing one's first home_

Why? Again you are assuming that the alternative to owning a home is renting
one and having no savings. The cost of housing (renting) would be much lower
in a country without massive over-bidding on property. There is no reason to
give a tax benefit to this particular type of investment (property) over any
other types of investment.

~~~
dasmoth
> > A paid off home is a social safety net against homelessness > Stocks and
> savings are equally a safety net against loss of primary income.

Landlords and letting agencies can be kind-of funny beasts, they're not
necessarily happy to have an unemployed guy as a tenant even if he owns a pile
of shares.

~~~
Scarblac
So? It's not as if they can kick you out of the house you live in. Not in
Germany, anyway.

------
DocTomoe
Being German I want to pPoint out that the article leaves out one cruicial
detail: Building your own home puts you into debt for quite literally the rest
of your life. We do not like debt.

~~~
buro9
Yup.

Germany has one of the lowest adoption rates of credit products such as the
humble credit card out of nearly all Western nations.

Debt is not liked.

Edit: From the same site, the linked article at the bottom has the answer:
[http://qz.com/262595/why-germans-pay-cash-for-almost-
everyth...](http://qz.com/262595/why-germans-pay-cash-for-almost-everything/)

A better link: [http://www.businessinsider.com/you-have-to-understand-
german...](http://www.businessinsider.com/you-have-to-understand-germanys-
long-standing-fear-of-debt-2012-7?IR=T)

~~~
premium-concern
Yep. "Don't buy things if you can't pay for then." sounds reasonable, but some
other countries seem to disagree.

Not surprised that those countries suffer from government shutdowns over how
much the debt ceiling is raised.

~~~
thesimon
>suffer from government shutdowns over how much the debt ceiling is raised

On the other hand: The government shutdown because of the debt ceiling seems
just like "Stop hitting yourself" on the playground.

And Germany's budget is far from balanced.

~~~
kriro
Nominally Germany has a balanced budget. I agree it isn't really balanced and
the big zero is just achieved via some shifting around of things.

However the fact that the government jumps through all sorts of hoops to be
able to say the budget is balanced is at least an interesting indicator that
it does seem to matter to enough people.

~~~
premium-concern
Even government budgets have to adhere to some standardized schemes of
reporting. See also rating firms.

Otherwise even the US would have a balanced budget and no debts. (Ignoring the
fact that the US is the main force behind trying to change the account rules
to make them look less bad.)

------
LeanderK
I am a German CS-Student and currently renting in a shared flat with 4 other
students. We call it WG (living-community) and its really popular not only
with students, but i know a lot of young professionals and even middle aged
ones that share an apartment (it gained popularity in the 60s, so i think its
more of an culture thing that older do not share a flat). If you are in a
partnership, you can move out and share a smaller one with your partner, but
if your not in a partnership (or not that close yet) i wouldn't want to miss
living in a shared apartment. You come home, talk about your day, cook
together and on the weekend you can go out together. There is always something
going on. I can't imagine living in my own apartment all by myself. Working
long and then coming home into an empty, dead, dark apartment with no one to
talk to.

Serious question: Why is it not very popular in other countries?

~~~
rmc
> _Serious question: Why is it not very popular in other countries?_

Because some countries have much, much worse tenants rights.

I moved from Ireland to Germany and in Ireland:

* There is basically no protection for rent increases, some people are being told their rent is increasing by 50%

* Can't change your apartment. Not allowed to paint the walls, nearly all come with furniture, better make sure you don't damage any of it.

* Oh the landlord/landlord's relative wants to live in the apartment. Eviction time for you.

* You give your landlord your deposit. Let's hope they can find it again if you move out.

* By default, no pets allowed. And many landlords will say no.

* Did I mention about the rent increases?

~~~
premium-concern
In Germany:

\- Rent increase limits

\- Larger changes need landlord's approval (changing walls and stuff). A lot
of smaller stuff can be done on your own and doesn't require asking the
landlords. (Many landlords are happy if you want to paint the walls etc.,
though.)

\- Only smaller apartments (often intended for students) come usually with
furniture

\- The deposit has to be put on a special, locked bank account. The money can
only been withdrawn if both sides tell the bank in writing that the rent
contract is over

\- Depends on the size of the pet

~~~
pluma
Actually IIRC the law was changed so tenants only have to make sure the walls
have a neutral appearance (i.e. usually white woodchip wallpaper) when moving
out, so they're pretty much free to decorate the place as they want as long as
they don't outright demolish or damage the walls.

There used to be a requirement for tenants to renovate the apartment (i.e.
thorough cleaning, new wallpaper and white paint) before moving out but that
requirement has been reduced to "besenrein" (literally "broom clean", i.e. no
rubbish or dirt). Damage to windows and existing fittings etc is deducted from
the deposit but tenants have the right to a formal inspection with a signed
report to avoid dubious claims.

The "Kautionskonto" (the special bank account) is widespread but not
universal. However there are also co-operatives that invest your deposit and
actually pass on the interest to you when you move out (these apartments are
rare though).

Some specifics on pets: fish and caged pets (e.g. rodents) are generally
allowed within normal quantities. Cats require approval but disapproval is
practically impossible unless there are very good reasons. Dogs always require
approval and disapproval is more likely. Many contracts explicitly allow
specific pets (including dogs). If another tenant was given permission for a
dog, it's hard or impossible to make a case for forbidding a similar dog.
"Kampfhunde" (attack dogs) may be more problematic.

~~~
premium-concern
> However there are also co-operatives that invest your deposit and actually
> pass on the interest to you when you move out (these apartments are rare
> though).

This is not optional. It is required by law. Interest from deposits belong to
the renter.

~~~
pluma
Sure, but the difference is that they actually invest it. Normally the money
pretty much just sits there.

~~~
premium-concern
Given the size of the deposits, and the ROIs of available low-risk
investments, does the difference really matter?

Skip a single CappuFrappeGingerPumpkinLatte (or what people buy in cafes in
SF) and you just got more money than any investment on the deposit can ever
make.

~~~
pluma
Depends on the size I guess, but generally that feeling of "oh, look, my money
did some work for me" leaves tenants with some happy thoughts on moving out.

------
whack
The Germans seem to be far ahead of the curve here. From a financial planning
perspective, buying a home results in:

1) The vast majority of your assets becoming concentrated in a single plot of
land, in a single neighborhood, in a single city

2) Your future mobility to pursue jobs in other cities, becoming significantly
constrained

If you want to invest your savings, then invest them in the stock/bond
markets. If you really love real estate investments for some reason, invest in
a REIT fund where your assets will be diversified across thousands of
properties, and fully managed by others on your behalf. Pursuing a national
policy of home-ownership makes little sense.

~~~
coldtea
> _Your future mobility to pursue jobs in other cities, becoming significantly
> constrained_

Perhaps the idea of people who haven't adopted this is that, unless they like
doing so, humans should not have to live like nomads moving here and there to
pursue this or that financial opportunity, but instead should be allowed to
grow roots in some place, help shape it and improve it, connect with their
neighbors, etc.

~~~
Kalium
People are allowed to grow roots, shape and improve a place, and connect with
their neighbors all they like. This is the state of places like the USA today.

People aren't allowed to demand that the economy provide them with all the
means they might wish for to do these things in any arbitrarily selected
location.

~~~
marcosdumay
> People are allowed to grow roots, shape and improve a place, and connect
> with their neighbors all they like.

Well, their landlord may disagree.

That is, if they are renting... what is what this discussion is about.

~~~
Kalium
That's covered under the second point.

------
gumby
The idea that owning a home is a great investment is an article of faith, not
evidence.

Imagine if large public companies owned most of the housing stock and rather
than buying a house you invested in these companies. Instead of bearing all
the location and liquidity risk of owning a house, you would spread that risk
over large numbers of markets. In fact being stuck owning a house in an
unfavorable market can keep someone from moving, which reduces labor mobility.

~~~
cmdrfred
It really depends on where you live. I live outside of Philadelphia. My
mortgage, taxes and insurance is less than $1200 dollars for a 3 bedroom
house. I'd pay at least $1200 to rent a crappy 2 bedroom apartment and rent
just keeps going up around here. Consider, even If my homes value stays
completely static (according to Zillow it went up a 5 percent this year), in
ten years time I will be paying considerably less mortgage than what that
apartment will rent for.

~~~
jessedhillon
Yes, but there's a reason why the crappy 2br costs as much as your house. That
reason might not appeal to you, but it exists and has a specific monetary
value.

~~~
techthroway443
Could you explain the reason?

~~~
shostack
I'd guess it was referring to the fact that there are geographical, cultural
preferences etc., not to mention employment opportunities that cause the Bay
Area, NY, and other extremely expensive cities to be much more popular
compared to Philly.

Not to knock your choice, but many people including myself would never
consider living there.

~~~
cmdrfred
I don't think that explains why the apartment building 5 minutes away in a
worse town (higher crime, access to lower rated schools) rents a 2 bedroom for
more than the cost of my mortgage, taxes and insurance. My belief is that the
people in that building don't have the access to capital to buy a home, and
thus the landlord is able to arbitrage his access to capital via a bank in
order to charge rents that are rather high in comparison.

~~~
gumby
It's the opposite: the cost of mortgage is fake-subsidized via tax exemption
and since everyone thinks ownership is the "goal" the supply of rental
properties asymptotes to the equivalent price. Plus because of the bias to
home ownership there is less rental stock.

The reason I say it is "fake-subsidized" is straightforward: say you make
$100K per year. A reasonable expense on housing is 25% of your income -- 25K
per year or about 2K/month. Luckily for you, you can use the full 25K because
you won't be paying income tax on the money when you buy the house. So you can
buy more house...except all other buyers making 100K can do the same. If you
had to pay after-tax dollars you could only pay, say, $1500/month -- but so
would everyone else you're competing with. In essence the tax subsidy only
helps real estate agents and those who want to live off the appreciation of
their house...which is a risk (yes the long term trend is upwards, but not
necessarily where you live, and not necessarily when you plan to retire).

And let's not forget that almost all the mortgages are held by the US
government. It's a highly distorted market, and while I believe it developed
with good intentions, it's not at all clear it's good for the majority of
citizens.

------
WA
On the other hand, many Germans believe: renting is paying someone else,
buying is paying yourself (which is nonsense). Especially in more rural areas,
buying/building a house is considered a big achievement in life. People are
even willing to move from a smaller city to little towns just to be home-
owners.

Buying a house can be a net loss over the years, if you're not located in a
major city. Especially in East Germany, house prices are declining. See this
graphic [1]. Everything yellow basically doesn't yield any returns. Housing
prices in orange and red areas decline over the years.

But even in green areas, there are so many knobs you can turn to make buying
or renting more feasible than the other. It boils down to lifestyle decision:
Do you want to live in your own house or not? If you prefer to rent: Are you
willing to save money by other means? Because buying a house works for many
people simply because they're forced to "save" a certain percentage of their
income every month.

I prefer renting, because of the flexibility. I put quite a bit of money in
stocks instead.

[1]:
[http://cdn3.spiegel.de/images/image-726182-galleryV9-uttw-72...](http://cdn3.spiegel.de/images/image-726182-galleryV9-uttw-726182.jpg)

~~~
sickbeard
Frankly the only people who say this are investors. If you look at it from a
purely investing perspective it makes sense to buy a house and then rent it
out, rather than buy a house and live in it as an investment.

But most people are not investors, they want a home to raise their kids and be
a place they belong. That's the disconnect

~~~
jpetso
In Canada, there's a capital gains tax exemption for your (owned) primary
residence. If I wanted to live in a given place, it would be stupid to buy the
place, rent it out, and rent another place myself with the rent money minus
the income tax I paid from it. When selling the place, I owe capital gains
taxes on it. Taken together, that ends up being a worse deal for me than
merely buying what I need and using it for myself, tax-free.

Of course, what renting gives you is the flexibility to live in a smaller
place and avoid overpaying for extra space that you _might_ want to use at a
later time. Still, the savings from renting a smaller place have to be greater
than the tax expenses that I get charged for renting out.

------
mrottenkolber
Germany is a two-class society divided into landlords and renters. A landlord
will usually not own only one but ~3-20 houses that total to ~15-100 flats.
The landlords often are renters themselves.

When compared with big housing companies, private landlords require bigger
profit margins, leading to low quality maintenance of existing houses and ex-
orbital rents. Especially in crowded cities, rent regulation is non existent
and its a sellers market, inflated by wealthy students that rent expensive
micro-flats during university.

You or your parents don’t own houses, and are self sufficient on a regular
job? Well, you are shit out of luck then. As much as 70% of your income will
go towards your rent, effectively financing the better-off and the further
expansion of their inefficient renting businesses.

~~~
fwn
Spending 70% of your income on rent is far from inevitable in Germany.

~~~
LeChuck
Not only far from inevitable but impossible in a lot of cases. When I was
looking for an apartment in Germany most (all? I can't remember) landlords
wanted to verify that my income was at least three times the rent.

~~~
mrottenkolber
Well, that can’t work out in all cases, obviously. Remember that a significant
chunk of the people don’t make 3x of a low rent in many towns.

------
Normal_gaussian
The only liberty that renting provides is the protection from the whims of the
housing market.

Aside from that it takes liberties right left and centre. I cannot structure
my house and life as I want from painting and shelving through pets and
kitchen appliances.

I cannot fix something without causing a hassle and days off work.

I cannot register a business here.

I am at the whim of my landlord.

Renting in the UK is a pain in the arse. I do to see renting as particularly
positive for the individual.

~~~
imtringued
On the other hand it eliminates the NIBMY problem. Since the tenants do not
own their home they don't have the pressure to protect their investment. The
landlord receives returns on his investment through rent on a monthly basis
which lessens the risk of a sudden development reducing the value of the home.
Home owners that live in their own home on the other hand face the full risk
since they can only recoup their costs when they sell the property.

~~~
Normal_gaussian
Which introduces the problem of "Whatever, it isn't my mine I will just move
away when the area gets shit" leading to lower quality stock.

On my current street, opposite the flats further up, there is regular fly
tipping and various illegal activities. The fly tipping can take weeks to be
dealt with as nobody rings the council (I've started emailing the council when
I notice it, but I don't walk that way often).

Renters just don't have enough skin in the game to maintain the communities.

------
standel
It's an interesting article. I'm from Belgium, one of the highest house owners
countries. Even though it's true it's a life-long debt and it might be risky
(in case of crisis), housing is still considered as a Long Term Investment so
that you can pass that investment to your children (after heavy tax deduction
:)). I find interesting the article does not mention who actually owns all
these houses and who benefits in the long term. After all, renting has a
guaranteed zero ROI.

Also, recently, I've been looking at housing market in Munich and it's very
very expensive. Renting is ~20% more expensive than in Brussels and
acquisition is +100% more expensive. So, although I admit I do not know rest
of Germany housing market, I have some troubles thinking why Munich would be
more expensive than Brussels. And I certainly miss, from that perspective, why
German system would be more interesting.

~~~
coldtea
> _After all, renting has a guaranteed zero ROI._

A guaranteed zero ROI is better than a negative ROI which you can get with
buying a house (e.g. the house you can resell it drops due to the market and
you can't afford the mortgage for some reason...)

~~~
standel
negative ROI on investment is the risk component of your investment. This is
true of any investment. Stock being certainly higher risks than housing and
still people invest a lot in stocks.

But I should have said renting is a sunk cost. There is no investment
component at all in renting.

~~~
kdamken
_Stock being certainly higher risks than housing and still people invest a lot
in stocks._

I would say low cost index funds are a much lower risk investment than a
mortgage. They also have the advantage of being very liquid in the case of
actually needing your money. Rent is not a sunk cost, this is a common
misconception.

There are many good reasons to buy a home, but do not think of it as an
"investment". Compared to other investment options, it's a pretty terrible
one.

I highly recommend reading this article to learn more -
[http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-
terrib...](http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-
investment/)

------
vslira
According to the article, mainly: 1 - Government doesn't subsidize homeowners;
2 - Renting rules are reasonable for renters, increasing supply which makes
renting affordable.

There, saved you a click.

~~~
easytiger
The government doesn't subsidies home owners in the UK and it is considered
very very expensive, apparently, by many.

~~~
MagnumOpus
The government does subsidise home owners through nearly a dozen different
schemes[1], landlords through a dozen more[2], and the mortgage banks through
another score[3], which is the reason why prices are very expensive indeed.

[1] freedom from capital gains tax, RTB, HTB equity loan, HTB mortgage
guarantee, HTB ISA, Forces HTB, NewBuy, AFHOS, Shared Ownership Scheme, Key
Worker Scheme, Home Ownership Scheme for Cripples, and that is just off the
top of my head

[2] rent floors through LHA, tax deductability, ability to flip residence
between first and second homes for zero cap gains tax, freedom from
inheritance tax beyond the usual limit...

[3] state bailouts for all major banks, gurantees, QE, QE2, QE3, liquidity
schemes, credit purchase schemes etc etc

------
adrianratnapala
I agree it is a good thing for Germany to have so much renting. Indeed I think
home-ownership will be the #1 driver of inequality in other contries over the
next generation or two.

Those countries will have policies that lcaim help poor people buy houses, but
the effect is to just inflate prices and increase financial risk -- as the
world has already seen. The one thing that would really help -- increased
supply is blocked by a powerful home-owners lobby damanding zoning rules and
other restrictions.

In Germany the bloc is powerful, and probably gets more goodies than it
should. But at least here they are constant building new housing.

------
beguiledfoil
Having lived in jurisdictions that limit annual rent increases via a rental
index and jurisdictions that do not, I prefer the former. In America such
action is dismissed as a price control, unfortunately for me.

------
josefresco
How does Germany handle retirement? In the US, your home is seen as an
investment, one that can partially fun retirement or depending on the market,
pre-retirement income.

~~~
nommm-nommm
>In the US, your home is seen as an investment

Historically a very poor one.

[http://www.usatoday.com/story/money/personalfinance/2014/05/...](http://www.usatoday.com/story/money/personalfinance/2014/05/10/why-
your-home-is-not-a-good-investment/8900911/)

>"Capital gains have not even been positive. From 1890 to 1990, real
inflation-corrected home prices were virtually unchanged."

>From 1890 -- just three decades after the Civil War -- through 2012, home
prices adjusted for inflation literally went nowhere. Not a single dime of
real growth. For comparison, the S&P 500 increased more than 2,000-fold during
that period, adjusted for inflation. And from 1890 to through 1980, real home
prices actually declined by about 10%.

Not to say that a house is a bad thing. A house can be great! It provides
shelter, stability, and can provide a vast amount of joy and pride. Its a very
poor investment vehicle. Its a very bad idea to have 100% of your wealth tied
up in your primary residence.

Diversification is a key to financial stability everywhere.

~~~
bzbarsky
> home prices adjusted for inflation literally went nowhere

Yes, but what does that mean for money invested in houses? The reason this is
not the same question is that money invested in houses is leveraged, at least
in the short term.

Simple example of how this can work: You buy a house at 20% down and an
interest-only mortgage with a fixed interest rate of 4%. Inflation averages 3%
and your house's price grows at exactly inflation. You live there for 40 years
and then sell. To make our numbers simple, let's say the initial price was
$100k.

So you put $20k down and take out a $80k loan. Each year you pay $3.2k in
mortgage interest.

The price of your house after 40 years is, in then dollars, $326k. You sell,
pay off the $80k loan, and have $246k left.

Let's consider the alternate situation: you rented for those 40 years. How
much did you pay for rent? Chances are, it's no less than the interest on your
loan (if only because a landlord would have that interest _and_ other
expenses). In practice it probably went up over time, unlike your payments,
but let's pretend it didn't. You invested your $20k downpayment in the stock
market. What nominal return do you need to get to end up with $246k at the end
of 40 years? The answer is about 6.5%. If inflation really averaged 3%, then
that's a pretty decent stock market return, and that's all assuming that the
capital gains treatment of the house and the stocks is the same (it's _not_ in
the US; houses are exempt from capital gains tax to a large extent).

Obviously if you actually pay off your house all this goes out the window. ;)
Likewise, if the house goes _down_ in price the leverage acts against you.

Realistically, houses are an awesome investment if you buy at a time of low-
ish interest rates, and then before you've really paid off a large fraction of
the house inflation spikes. If house prices simply keep up with inflation in
that situation, you can really win out. People who bought in the US in the 60s
and sold in the 80s or 90s did quite well, on average.

------
VLM
Article misses the hyperinflation of the 20s and the capital markets in the
50s.

By the time the cold war made it apparent that 20s style economy destroying
reparations would not be paid, renting was already baked into the cake.

Residential real estate is non-productive and post WW2 Germany had not use for
a capital drain if anything they needed capital along the lines of the
Marshall Plan so its not like anyone was interested in wasting capital in a
modern USA style housing bubble.

------
sleepyhead
And how is that working out in Berlin now? Rents in Prenzlauer Berg and
Neukölln increasing significantly every year. There wasn't a need to buy
before because rent was dirt cheap. That's changing fast. It's obviously going
to push out those who are poor but perhaps this will lead to more people
realising the benefits of owning property.

------
adrianlmm
The culture is so much different in México, the first thing you do when you
start working is to buy a house even if rents are cheap.

~~~
yolesaber
What's the average house price tho

~~~
chilicuil
It highly depends on the zone, in Mexico City surroundings you could get or
build a house for probably USD 100k+, in downtown it could easily be 500k for
a full house or 200k for a department flat. It could sound cheap but the
average salary is low too, so you can easily be in dept for the next 25-30
years. Many people buy or build outside of the border city and spend 3-4 hours
everyday commuting. In general, I think people try really hard (sometimes
during its whole life) to buy/build its own but I don't see that happening
much longer, specially for young people who start working at an older age and
has additional aspirations.

------
bogomipz
I would be curious to know or hear if anyone thinks this trend has been
altered since 2008. For close to a decade now we have had extremely low or in
some case negative(in Europe) interest rates. Thats a lot of cheap financing.
As the article points out the data is from 2004.

~~~
MandieD
I would be shocked if it hasn't. Here in the greater Nuremberg area, prices
have been going up steadily for the past 3 years or so. It took us a year to
make the winning offer on a reasonably-priced house. We got a 15 yr mortgage
at 1.6% from the local Sparkasse (think Savings and Loan), though we did put
down a traditional (high) down payment.

So why did we buy? My (German) husband's fear of inflation finally surpassed
his fear of debt to accommodate my Anglo-American need for my own pied a terre
:) Rents are going up around here, and even though there's the 15% over 3 year
limit, that's still a lot over the long term.

It was nice not to feel like we _had_ to buy a house, though. That gave us
time to save up, to know what we really wanted in a house and to be really
certain that we wanted to stay in this region.

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androidfox
I think in small cities people still buy houses. When they cannot afford the
price they rent. Or is there really some strong reports that this happens in
Germany only

~~~
chrisper
Yes, I agree with you. Reading the comments here seems weird to me, because
where I grew up owning a house is pretty much normal. I grew up in Southern
Germany where there are a billion small towns. So most people are owning for
sure and not renting. This may not be true in large cities, like Munich or
Berlin.

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tiatia
Sure. Housing prices in metropolitan areas are sky high, thanks to the asset
price inflation of the ECB. Hey, even a house in a tiny village easily sets
you 300k Euro back. The secret of the German export"wunder" is extremely low
wages.

"Most Germans don’t buy their homes, they rent."

Yes. Because they can't fucking afford a house. Riddle solved. Move on.

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merb
> more than 93% of German respondents tell pollsters they’re satisfied

You only trust the statistic you created yourself. That is not a true
statement.

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bogomipz
I realize that Berlin is nothing like the rest of Germany but I noticed that
the rental housing stock there seems to be pretty tight. There's a fair amount
of construction going on but it looked like a premium housing stock that was
going up. I assumed these were probably for sale but maybe they are high end
rentals?

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adrianratnapala
Can somone explain what the article means by:

> Germany also loosened regulation of rental caps sooner than many other
> countries,

Does that mean the amount of rent control was deregulated? I thought the rent
control here in Germany was pretty strict -- at least in the sense that the
landlord can't increase the rent during an existing tenancy.

~~~
fuzzy2
Rent can be increased, of course, but only within limits. Limits that the
tenant must enforce “manually” by going to court.

~~~
k__
I know people who live in a flat for about 20 years now and they don't pay
that much more than 20 years ago.

So it seems to work fine

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varjag
So who then owns the property to rent out for most of the Germans?

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pyb
Who owns most of the homes then ? Institutional investors ?

~~~
adrianratnapala
The home ownership percentage is still 43%, so not that low. Landlords seem to
be the usual mix of older, upper-middle proffessionals that you see in other
countries. It's just a bit more concentrated.

Also there are many houses which have two or three appartments. The owner will
live in one appartment, and either have a different generation of their family
in the other ones, or else rent it for money.

~~~
ygra
In my home city (Rostock) a large portion of flats are owned by a single,
large-ish company. A stark difference to now (Tübingen) where most flats are
owned by individuals. Personally it's much easier to handle contractual stuff
(which renting always entails) with a company instead of a person. At least
landlords here tend to have trouble distinguishing contractual interactions
(reducing rent resulting from unfixed issues, complaints about things to be
fixed, etc.) and dealing with them as a person. With the landlord living just
two streets away they're sometimes inclined to take things personal and show
up on your doorstep.

~~~
pluma
I live in two places in Germany: a city of one million people and a small town
of 16,000.

In the city the apartment I live in as well as most buildings nearby are owned
by a stock company that owns 42,000 apartments and is mostly (88%) owned by
the city.

In the town the apartment is part of a building owned by an elderly couple
living a few blocks away.

Compared with the company, dealing with the private landlord is a hassle. He's
not very mobile, so every interaction basically takes place in his living
room. He's also of course not doing this full-time, so he's not always up to
date on all legal aspects or all of the necessary paperwork.

It's nice to see private individuals owning land and houses in principle, but
from a pragmatic point of view the company is far easier to deal with. Their
scale allows them to have offices with actual business hours and problems can
be handled as routine whereas with an individual every little thing is of
course special.

Because the company is mostly owned by the city, they also invest in long-term
projects and community building -- which a private individual naturally can't
do as easily.

So far I haven't had any problems with either of the two, but I'm fairly
certain that having an actual conflict with the private couple would be a far
greater issue than taking the company to court -- not in the least because in
a small town everybody would hear about it and because they're private
individuals it would be seen as personal.

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wineisfine
It seems to me a huge problem when they retire?

~~~
pluma
If you run out of money, the state pays for your housing. If you saved money
like a good citizen, you're paying out of your own pocket.

