Don't buy a house in Germany

Well, not unless you enjoy throwing away money.

Over the last 25+ years, property prices have been in decline. Does any one believe it'll change anytime soon??? The history.

And those who have one, don't try selling it yet. We have houses in our village that have been on the market for months, mainly due to the fairly high unemployment level here. They go eventually, but the owners have had to lower their prices dramatically.

so we should just throw our money away on miete instead?

why do so many people see buying a house as an investment rather than securing somewhere to live?

(note that that report is now over 2 years old - although I suspect the trends have continued)

That report is also based solely on national averages - I guess there's areas of Germany where house prices have increased, but that's more than countered out by a greater number of areas with price decreases.

That all really depends on where you decide to buy a house, where we have been
living for the past 15 years the value of our house has continued to rise (admittedly
much slower then UK)

We bought a place here after deciding that we wanted to stay long term. For us it worked out very well, as our mortgage is lower than what we paid in rent at our previous place. We also bought a cheap small place (1 bedroom 42 mtrs 69,000€) but spent a further 10.000 or so renovating it. We also lucked out in getting a good location (Langen near Frankfurt).

One thing we avoided were Hochhauses. They may be cheap but are impossible to sell and if they have a lift it adds 100€ a month to your nebenkosten.

I do find it odd that inspite of generious tax allowances (ending this year) most Germans will live in the same rented place their whole lives. I had a friend who lived in the same house for 35 years until his son in law bought it and rented to him.

2nd question first: Because it represents the biggest single investment most people will ever make.

1st question: Do the sums. I pay 700 Euros per month warm for my flat. If I bought one just like it, it would cost me about 50000 deposit plus about 1000 a month in mortgage payments. Now add on the maintenance costs and the NK included in the rent above. I haven't even considered the costs of purchase.

If I stuff my 50000 in a deposit account and save the difference between rent and mortgage, I'll be much better off. If I buy some shares, I should be able to see a return of about 7 or 8% per annum.

If I buy property again, it probably won't be in Germany...

This a very good point. If you see a house and an investment, and considering that you can borrow against its value, buying in a depreciating market is not a wise move. Those of us in the US and UK have been conditioned to 'break the rent cycle' and own our own place. That makes sense if you have low mortgage rates and appreciating prices. In Germany, particularly in the east, it really is cheaper to rent.

We're taking over my GF's grandmother's house because it is literally unsellable. We'll renovate it and live there with no mortgage and no rent, but it still won't be that much cheaper than renting once you figure in utilities, tax and upkeep. I would think long and hard before buying a place here.

Depends on the location! Location location location...

In Stuttgart prices continue to rise, as does the rent. You need tons of capital to get into the buying market, but once you're in it's far better than renting. Yip, it's cheaper in many cases.

The only good thing about the German market is it doesn't have boom and bust in the way it does in the volatile UK market. People in the UK market have short memories - only 12 years ago 60,000 people PER MONTH were handing back their keys to the bank because of negative equity. I was among the generation that bought at the wrong time (unlike the 80s yuppies) and I could tell scores of horrific stories from people like me.

Many of my peers took ages to recover financially!

.

The only good thing about the German market is it doesn't have boom and bust in the way it does in the volatile UK market.

ITS JUST BUST

If I stuff my 50000 in a deposit account and save the difference between rent and mortgage, I'll be much better off. If I buy some shares, I should be able to see a return of about 7 or 8% per annum.[quote]

A while back the Economist came to the same conclusion, that in America you were generally better off renting rather than buying, and someone wrote and said that most of us buy because were more likely to spend rather than invest the difference.

1 bedroom flats can be bought for as little as 50.000 (or less) in Frankfurt but who'd want to live there! There cheap for a very good reason.

I recently read an article, which made me really think twice about buying...I have always been a 'dont-waste-your-money-rent' type. In short it basically said that if you add the price you buy the house for plus what people invest over the years it is much more expensive than renting. You don't just invest money, but also time (much more than what you think!) and in the end your kids inherit it and sell it...then you really have less than what you thought you had in the beginning???

to add to all of the above, I wont be buying a place in Germany for the same reason i won't be buying a place in the UK - like most of us here, I am an expat who appreciates the flexibility that renting gives - no long term ties to a property, if something goes wrong someone else pays for it to get fixed etc.

Then in 18 months you can move on to the next exciting job in New York or Sydney or Munich or Zurich...

I have been in Düss for about 18Months now and although it's a great place buying a house would be a bit too permanent for me...and I couldn't afford one with all of that tax.

I can see the point you are getting at, but why should I live in rent for 20-30 years paying off someone elses Mortgage, when I could be paying for my own. The property market my not be as lucrative as in the UK, but in the Fatherland Property will become a vital part of your pension.
I would rather invest now in a roof over my head than having to pay rent when I am not working any more.

And that's the reason I bought.
I appreciate the arguments about the prices not rising here but there are only a minority of people who are wise enough to invest the money they save. Also, with pensions not rising and unlikely to rise for a long time, a paid-for roof over your head when your reach pensionable age will be a massive advantage.

I am with Farlands and Telford on this. We are also considering buying at the moment in the Rhein Main area - I would not however be so keen if we were located somewhere else !

Option 1: rent all your life, stay flexible, move with your work, line landlords' pockets


... if you can. I did too. And at some point you try to work out where all the money went! Fast cars, skiing, exotic holidays. Boys' toys. Fine, but that's not the only side of the coin.

Option 2: pay a mortgage, get tied to it, settle down, maybe even make a "loss". But: not have to argue with pig-headed landlords about putting up shelves or redecorating - and, CRUCIALLY, not have to pay rent during your retirement!!!

All the figures point to future pensioners with much lower pensions. I'm damned if I'm going to be using what little money I have left to top up somebody else's bank balance.

Almost all the older ones with a comfortable lifestyle (and enough money to eat well and go on holidays) own the roof over their head.

Well said.

ime still tryin to climb back on to the diplomatic fence and not upset anyone.
so dont get me started eh, just dont.

[quote name='BuzzAbroad' post='71521' date='Jan 28 2006, 04:13 PM']Option 2: pay a mortgage, get tied to it, settle down, maybe even make a "loss". But: not have to argue with pig-headed landlords about putting up shelves or redecorating - and, CRUCIALLY, not have to pay rent during your retirement!!![/quote]

I must have been lucky then, I've only had to argue with one pigheaded out of six landlords, and it only took one letter for him to cave in... You have to do the groundwork at the beginning, to save arguments later.

[quote]
All the figures point to future pensioners with much lower pensions. I'm damned if I'm going to be using what little money I have left to top up somebody else's bank balance.
[/quote]Perhaps you need to do a realistic calculation on what a house really costs, and who makes a profit on it.

All the arguments for buying a house to live in were perhaps right 50 or 60 years ago, but they haven't been for the last 20. As has been written previously in this thread, you have to consider the running costs (running repairs, [i]Grundstucksteuer[quote], insurances, etc) as well as the larger repairs (eg: heating system and roof replacements) that crop up after 20 or 30 years.

[quote]
Almost all the older ones with a comfortable lifestyle (and enough money to eat well and go on holidays) own the roof over their head.[/quote]

These people have the benefit of comfortable pension payments enabling them to finance the running cost of their houses. Many use re-mortgages to pay for some of that luxury. In years to come, pensioners with lower pension payments will not be able to do this. In fact it is already happening to many today.

If your pension isn't enough to pay your running costs, the social department will insist you sell-off any property before they give you any help. So you will end up selling your big, comfortable house, that you have slaved away to pay-off, and move into smaller, rented accommodation...

...or sell off your big, comfortable house and buy a smaller house or apartment which has much lower running costs, leaving you with more of your pension do to as you please with.

It's what a lot of people I know have done, especially once the kids have moved out and got a place of their own.

hold on to your hats but here comes a halfways serious post from the yamster.

now then ive been legaly living and working here in germany for over seven years and despite the fackts that i dont earn a fortune and i must give allmost fifty percent of my bruto earnings to the state and i send a
quarter of whats left over to england for my son josh ive taken and payed back bank loans amounting to 20 thousand euros, mostly spent on cars and holidays.
so i would gues my credit isnt bad here so what do you think my chances of getting a big loan to buy a flat are?

So you prefer argueing with lots of neighbours over argueing with one landlord then Yam Yam?


That only works to a certain extent. Many become attached to a house, because of the time spent living there, the memories, all the Eigenleistung they stuck into it.

It also only works if the economy provides enough buyers to support the number who want to sell. It is in cases already that far. There are desireable houses in desireable areas, which will find buyers with money. Although, I know people, who where glad to get 2/3rds of what the house would have had to have been worth.

The point I was making is that you cannot take the situation today as a possibility for the future. If you compare the way the economy and the market here have changed between 60, 40 and 20 years ago with today, then project both into the future, then building for yourself to live in doesn't work out unless you already have all the money you need.

I used to live in a flat in Cologne, as did the Immobilienmaklerin, who managed the flats for my landlord. She had her own block of flats rented out, but lived herself in a rented flat because it "wasn't worth building to live in" -- that was 18 years ago. It is even less worth it today, as many of the tax "advantages" have been removed.

The reality of buying houses is similar to buying cars. The psychologic/emotional aspects lead many people to an "advantageous" calculation. Remember that buying/selling property to live in is an integral part of the UK or US economies, in Germany (as in other EU countries) there just isn't the property ladder to offset the cost of financing, so houses do not appreciate as in UK and US, the calculation model has to account for that.

In Germany, the only way to get any real tax advantage is to build rental property you don't live in. Then you can set all costs against tax, and the losses arising from the difference between operating cost and rental income in the initial years can also be set-off against personal income to reduce income tax. When the mortgages are payed-off, the rental income is then more than the operating costs, and you can live from that profit forever. That brings us back to my neighbour all those years ago...

Arguing with one landlord and[b] the other neighbours.

Surely it depends upon your personal circumstances. Had we not had three children, we would probably have not considered building a house, which we did 15 years ago. We did our sums - as a five person household, to build our own house with a garden than to rent one apartment large enough to accommodate us all. It'll be paid off in a few years' time, when hubby goes into "Pension". Yes folks, he's a Beamte!

Well, I've got several properties here and I'm waiting for the market to catch up with the other western european countries. Things are looking good. When everyone is talking the market down, when the consensus is that things will never get better, that's the time to get involved. Why do you think foreigners are starting to pile into the property market, buying up huge portfolios? They aren't doing it because they're bearish on prices.

Of course, it's all about location. Plus. if you do buy, make sure there is rental demand in the area, in case your situation changes. and if you do rent it out, make sure you have international tenants - you'll find you have a better understanding. German tenants are nightmare and will rip you off. (C'mon Hannah, let me have it ... but I am only speaking from my experience and the experience of numerous colleagues and friends). They're even worse than German landlords!!!

I am a tenant in my parents house, so my dad is the landlord.
Guess I am lucky

But if I had to, I'd rather would buy something (not a house prolly but a flat instead of renting it). Only if I plan to stay in Germany of course.

Now I know you can't trust estate agents, but the guy we bought our house through reckons he has a family who have been looking to buy in our street for ages who would pay about 40% more than we paid last year for our house.

Location, location, location.