Overpriced Homes: Germans Fork Out a Quarter of their Income on Housing
Germans spends a fourth of their income on housing expenses
Germans are shelling out a substantial portion of their income on housing expenses, with an average of 25% going towards rent, mortgage, or other housing costs. This alarming statistic comes from data compiled by the European statistical office Eurostat, analyzed by the Federal Statistical Office upon request from BSW [1][2].
Living in Germany doesn't come cheap. When compared to other European countries, Germany is among the most expensive, with housing costs almost never affordable in comparison [1].
In 2024, Germans spent 24.5% of their income on housing costs, which is 5.3 percentage points above the EU average [1]. This figure has slightly decreased compared to 2023, yet Germany persists in the "European top group" for expensive housing costs [1].
To put things into perspective, people at risk of poverty in Germany spent an average of 43.8% of their income on housing, nearly half of their earnings [1]. On the other hand, in countries like France, Austria, or the Netherlands, the figures are significantly lower [1].
Ranked by housing costs, Denmark holds the highest spot with an average share of 26.3% in 2024, followed closely by Greece with a whopping 35.5% [1]. Sweden is around the same as Germany, while Cyprus, Malta, Italy, and Slovenia report the lowest housing costs amongst European countries [1].
BSW Chairman Sahra Wagenknecht criticizes these statistics, stating, "The fact that people in countries like France or Austria spend significantly less on housing shows that it can be done differently" [1]. She advocates for the implementation of a nationwide rent cap and a greater share of non-profit housing in the housing market to alleviate these expenses [1].
- Luxury Living
- Germany
- Europe
- Housing Market
- Real Estate Prices
- Urbanization
- Legislation
- Affordable Housing
[1] ntv.de, hul/AFP
Insights:
- The sharp increase in real estate prices over the years in Germany is primarily attributed to strong demand and limited supply, especially in major cities like Berlin and Munich [3].
- Rapid urbanization and economic growth in cities like Berlin and Munich are contributing to increased rental rates and property prices [3].
- The removal of the Berlin rent cap, which previously halted rent hikes, has contributed to the rise in housing costs in Berlin [2].
- Insufficient supply of affordable housing in Germany contributes to higher costs for available housing options [2][3].
- In response to the high housing costs in Germany, which account for a quarter of the average income, a call for community policy changes emphasizing affordable housing and restrictive legislation is being advocated.
- Given the steep increase in real estate prices over the years, particularly in urban areas like Berlin and Munich, it is crucial to consider vocational training programs to train more construction workers, aiming to increase the supply of affordable housing in the housing market.
- As Germans fork out a substantial percentage of their income on housing expenses, investing in vocational training for the construction sector could be a viable solution for addressing the issue, ultimately bringing down real estate prices for personal finance sustainability.
- By implementing a nationwide rent cap and increasing the percentage of non-profit housing in the urban housing market, the financial burden on citizens may be alleviated, making housing more affordable.
- With Denmark and Greece having the highest and lowest average housing costs, respectively, within Europe as of 2024, it is essential for Germany to learn from the success stories of countries like France, Austria, and the Netherlands and revisit its community policies regarding housing to ensure a more balanced real estate market in the future.