To answer this question, we need to take a closer look at the German housing market, as it might be different from what you are used to at home. Germany is, generally speaking, a rental nation. Only 43% of all households are owned property, which is way lower than the European average of around 70%.
While buying a house is seen as a lifetime achievement in some countries, this is not necessarily the case in Germany. Rental laws are very consumer-friendly, and it is not uncommon for Germans to live in one rented flat for most of their lives. Furthermore, most Germans who own a house purchase it to make it their own family home rather than to use it as an investment and rent it out.
So whether buying a house in Germany is worth it depends on your views on property ownership, your finances, and your intentions with the house. You can take a look at the buying or renting calculator from Hypofriend to get more details on your individual situation. Hypofriend is an expat-friendly all-digital mortgage service.
Experts recommend having 20-30% of the property price available as equity capital. The more equity you have, the better conditions for a mortgage you will get. So how much money you need upfront to buy a house in Germany depends on the purchase price of the house.
Equity is not just money in your bank account, but it also includes fixed-income securities, shares and mutual funds, other property value, life insurance, etc. If you are unsure of your equity, you can use this calculator to find out.
Next to understanding the total cost involved in buying a house, the best way to approach buying a house or apartment in Germany is to figure out your finances first. Start by calculating how much mortgage you can afford and hence how much your desired house can cost. You can do so with the calculator of Loanlink24.
In 2020, the average cost per square meter for buying your own house was 2.750 euros. Similar to rental prices, the costs for buying a house have drastically increased in the past decade, especially in the bigger cities. The prices are mainly driven by increased demand and too little living space on the market. Here is an example of the average square meter price for buying a house in the largest German cities:
Hypofriend even helps you in finding a possible property by aggregating properties for sale from the websites above. They also offer a free property valuation tool that helps you understand whether the asking price equals the worth of the real estate.
Next to actively looking for your dream house online, you can also hire a real estate agent to scout for the property you have in mind. This way, you may also see properties that are not announced yet on the different online portals.
So many professional expats are calling Germany home these days and with long term mortgage rates at extreme lows and rental prices increasing in many areas it is little wonder that many are looking at the option of buying an apartment or house.
There is a dichotomy of property pricing between more rural and small town locations compared to the major cities such as Frankfurt, Munich, Berlin, Dusseldorf and Hamburg. Many of the larger towns have also seen a significant price increase, both for rentals and purchasing prices.
Unlike many other countries, Germans tend to buy property for life. They don't often see the more typical, Anglo-Saxon practice of buying now and continuously upgrading. This explains why there are fewer real-estate market price fluctuations, though the demand for choice locations remains high. It is generally wise to invest in properties in better areas. Location, location, location is still a key mantra when looking to purchase in Germany. A good infrastructure of transport, schooling and business desirability often pay dividends in the long run.
The percentage of Germans owning their homes is surprisingly low compared with elsewhere. At about 52% percent, it is the lowest in the entire European Union. However, this has grown from about 46% in 2014. This significant growth rate is expected to continue in key locations. As in other countries, the ratio differs according to income levels. The more affluent people are the more likely it is that they will own their own property.
It could be that extensive expatriate home purchases could cause this rate to rise further. There are no legal restrictions on non-Germans owning property, and many expats have significantly higher income levels and housing aspirations. This, coupled with an inability for the ECB to increase deposit rates at this time, is causing capital flows to seek property investment as a way forward in many markets. The only bar to foreign ownership of property might lie in the financial institutions that offer mortgages.
As in every country there are certain procedures for finding an apartment or house and closing the sale. It makes little sense in Germany to look for a \"For Sale\" sign in front of the house. This is not a common way of offering property. Many offers are published in newspapers. In the last few years various websites have sprung up that provide extensive listings on apartments and houses for sale as well as rental units. These websites also have extensive information on financing and other topics related to buying and renting property.
Some ads state that the property is von privat, which means that no real estate agent is involved. Most offers, though, are made through such agents (Immobilienmakler). A potential buyer should carefully research the property when buying a house in Germany. Many of the \"inexpensive\" homes advertised may require renovation investments well beyond the purchase price.
Another \"warning signal\" can be: grosszügige Räume, meaning \"large rooms\" or \"very spacious.\" What that really means is \"very expensive to heat.\" And watch out for the property that is für Schnellentschlossene (for quick decision-makers). That probably means the home has been on the market for a long time and may not be very desirable.
An agent may submit an invoice only when he has clearly arranged a notary contract between buyer and seller and this contract has been completed. An estate agent should provide a potential buyer at a viewing or upon request with the full address and name of the seller as well as the necessary information on the property including the energy efficiency certification, blueprint, square meterage, partition deed, protocols of owners meetings and annual costs (where applicable).
Once the buyer and seller have agreed on a purchase price, the property sales contract must be signed in the presence of a notary. This is to the advantage of both parties, and particularly the buyer, since it provides assurance that the entire transaction is carried out in accordance with the law. The notary fee, of about 2% of the purchase price, covers preparation of the contract, negotiations, the signing ceremony and entry in the land register.
The notary is legally bound to act as an impartial middleman between buyer and seller. He or she checks the land register to see whether the property can be sold at all; and if it can be, whether there are any restrictions on its use. The contract spells out the obligations of each party and the measures to be taken in the event of default. Once it is signed, the notary registers the change of ownership with the municipal government and enters the property in the land register.
The parties have complete freedom to decide on payment terms. In many cases the buyer has to obtain financing. Therefore the seller agrees to a priority notice in the land register that protects the buyer from other, unexpected sales activities on the part of the seller, such as trying to sell the property to somebody else for a better price.
The land register is located at the district courthouse and is the central document for a piece of property, with all necessary information on its ownership. An actual change in ownership can occur only when an entry has been made in this land register, and only when previous mortgages have been taken care of and the tax office has certified that the seller has no property taxes outstanding.
The register also spells out the rights of any third parties; those, for example, of tenants. Such tenants can't bar the sale of the property, but the new owner is bound by any lease arrangements to which the previous owner agreed. Hence, the new owner can't evict a tenant before the lease expires.
Indeed, population growth in cities like Berlin, Munich, Frankfurt and Düsseldorf will sustain the high demand for housing. Since rising property value also means higher rent, becoming an owner in many German cities can save money long term.
Everyone can apply for a mortgage in Germany. There are no restrictions for non-Germans purchasing property. It does not matter whether you are an expat, a blue card holder, an EU citizen or non-EU citizen. As for how much you can borrow, that depends on whether you live and work in Germany or not.
Lenders in Germany will request documentation to verify your financial and personal situation, as well as information about the property. Perhaps even more than other countries, Germany lenders are strict about due diligence.
First, make sure you place a reservation on the property and have all necessary documentation for your specific property handy. Then, begin to filter loan offers. Try to negotiate to improve the financing conditions. If you have a mortgage broker, they can help ensure that you get the best deal.
Because of sinking and historically low interest rates and a volatile stock market, buy to let properties have become very interesting investment objects. Due to growing demand for rental properties in Germany, renting out properties has become a great source of income. In addition, a strong German economy and growth in service jobs in urban cities including Berlin, Frankfurt, and Munich has resulted in rent increases in the city centers. You can find comprehensive overview of property price developments in German cities with LoanLink, a German mortgage advisor. 59ce067264