German housing crisis: 'Like winning the lottery!'
German housing crisis: 'Like winning the lottery!'
Housing is the social issue of the 21st century, German politicians and experts say time and again. And yet there's no improvement in sight, especially in cities, where affordable housing is in short supply.
The issue is near global no matter the wealth of a country. Why? We have allowed homes to be investment vehicles like stocks. This is what you get and given that those who own the homes do not want to see their value go down, you better believe they have infiltrated the government to ensure it. It is working. Maybe a little too well as things are getting desperate and surely cannot be sustainable.
Yes, but that's not the only factor.
We also have a larger population. And we have smaller household sizes, which means that the number of households has grown even quicker than the population. And higher rates of urbanisation, which means those households all want to live in a few overcrowded urban areas.
And we have more households owning multiple homes, either as investment, for recreational usage or to rent it out.
Solving these issues will not be simple, but it has to be done.
Well there are waysmto solve them but they would really hurt the feefees of some big lobbies.
1: limit in some way shape or form the ownership ofmproperty across the board. Average joe won't complain if he can only own two residential properties total because he'll be plenty happy with one. Current
parasitesinvestors don't like this because it will limit their profit margins2: provide high capacity transit to and from satelite towns, extending the 'reachable' distance (how far you can get within 15, 30, 60 minutes) by expanding primarily rail but also the auxiliary services would drastically increase the catchment area of large cities. Cars are really a doomed mode of transport for cities and should ideally be left at the entrance to any major metro region. Important part here: web transit instead of hub and spoke since the latter will make prices in the hub skyrocket even harder. The automotive industry will do their best to prevent this idea because none of them want to risk entering the rail market.
3: this last part really is the hardest because unlike the previousmtwo it cannot be easily solved by regulation/focused tax spending. The previous two points would only create conditions in which housing prices remain lowish if and only if the added space and forced distributed ownership of homes coincided with increased construction efforts.
Part of this means less luxury lofts but herein lies the problem: building has a high base cost (mainly the land itself but also things like plumbing and wiring) with any luxury installations on top of it drastically increasing the profit margins. I cannot think of any way to fix this that won't come back to monkey paw everyone down the line right now. Probably the best way I can think of is heavily reduced taxes for anyone working with first time (total lifetime) home owners coupled with a 5 year sale restriction on the property afterwards. That would give construction companies an incentive to work with collectives of regular people at lower rates rather than the same housing megacorp over and over again.
4: (Alternative) just slap an expotential tax on residential buildings past the first one and see how the market works itself out, not like it can get much worse lol
I'm a CTO for an SME in Berlin, and I couldn't afford to rent my extremely modest apartment if I had to get a new contract today.
Funny thing is Berlin was very cheap compared to the rest of Germany for years, while Munich was always deemed as the most expensive city in Germany
My grandfather had 5 kids and built a house with my grandmother only doing part time cleaning jobs in the 60s. Due to the situation after the war he was not able to find employment in his learned craft, instead he worked most of his life as a "simple" manual laborer.
My father paid out his 4 siblings for the house when he married my mother, they always joke that she met a rich man and married a poor one. That was ~2000. He's a learned instrument mechanic.
If my sister had not voluntarily backed out on inheriting the house I would not be in a position to comfortably pay her out until I'm well into my 40's. I have a bachelors in electronics and am working as a software engineer due to the rather low level coding taught/practiced within said degree.
No disrespect to the jobs of my father and grandfather, they did and do amazing work that is entirely out of my expertise and would take me years to learn let alone master to their degree. But when the family income bracket is moving higher and higher yet the ability to sustain a house is getting slimmer and slimmer something is seriously fucked up with the housing market.
Any family that has not sorted out housing inheritance will be forced to sell because the prices are so insane no one working even an average paying job will be able to reasonable pay out the "value" of the home to their siblings. Which will just force more and more people into renting because you simply don't afford a house in this market or at least not where I live.
And on the same time people look almost shocked when I state that me and my SO "Just" bought a flat and not a house. Like they do not see the prices and reality of wages. Like bruh...We could afford a house, if we wanted to pay the bank until we retire and work fulltime all the time. Which is not gonna happen with kids and generally unlikely.
I hope your sister got something good out of it too.
Other then that you need a good job and most likely two full time incomes to pay for a house and then you have to live a frugal lifestyle for over a decade. Once done it is a huge advantage, but it is really tough. Especially if you do not have family, which can give you some money to get started and you have to save while renting. That is honestly the only way young people can buy a house today.
The situation with my sister is unique enough if I explained it properly I'd probably semi-doxx myself to anyone who knows her irl so I won't go into much detail but she rescinded her inheritance on the house voluntarily due to some circumstances that have her inheriting more than me. I Still plan to pay her something regardless just not the ridiculous sum it would be going by the insanely inflated house value
In Munich, a modest 3-room flat costs 20 annual average for the city of Munich salaries.
And that's without paying any fees for the purchase of the said apartment and those fees can easily add a couple of extra years to the calculation. Then we have the interest rate of the bank, and of course the ever increasing prices of virtually everything but the salaries.
You also need 10% down payment of the said property in cash to ensure a lower interest rate, that's already a lot of money. So do the math to figure out how middle class people can afford a flat in Munich, where a rent for a 3-room flat is almost 2K, which by the way is more than 65% of the average salary in the city.
And all the constructions now within the city are luxurious properties where prices are double or triple that.
It is an absolute disgrace and it has been like this for at least 10 years. A friend of mine bought his flat around 10 years ago and now his flat costs 2.5x more. Crazy!
And then Germany is complaining that they cannot find skilled workers, so tell me would you go to Germany with those prices, relatively low salaries for high skilled positions and high tax burden?
There are good reasons to go to Germany, like relatively high salaries (it always depends on where you're comparing. At least in the fields I'm about to work in you earn significantly more in Germany than in Austria), high security, good schools and universities, ... (similar to Austria in that regard, maybe slightly worse).
The only reason against Europe in general is that you pay a lot for mandatory purchases (a home (doesn't matter if rented or bought), groceries, ...). Personally I still prefer that over cheaper costs of living but less security, worse child- and healthcare etc. but something has to change, because it's only getting more extreme.
If the development of 50 years ago to today will continue for the next 50 years something like a civil war is inevitable.
Yet there if always mountains of money for ridiculous projects like superexpensive highways in the city or car subsidies. But building new affordable housing is always refused with an absurd excuse like "we don't want to distort free market principles".
This is the best summary I could come up with:
On that day, the single father from Afghanistan, who had been living in Germany for more than 16 years, received notice that his lease near Bonn was being terminated because the owner was apparently planning to use it.
Due to high interest rates and construction costs, the German government is far from achieving its ambitious goal of building 400,000 new homes a year, including 100,000 social housing units.
Peter Kox, managing director of the Deutschen Mieterbund Bonn/Rhein-Sieg/Ahr, told DW: "Almost 50% of people in the large cities of Düsseldorf, Cologne, and Bonn are now eligible for subsidized housing based on their income.
There is a reason why Chancellor Olaf Scholz says that housing is the most important social issue in Germany: It not only affects single-parent families, the unemployed, students, and refugees, but increasingly the middle class as well.
Now, he says, some members who Kox hasn't heard from for years are coming forward looking for a place to live: "For example, because their landlords is trying to get rid of them so that they can rent out the apartment again at a higher price."
At the same time, they warned of a "dangerous scenario in which a crisis in the housing construction sector could trigger a domino effect and cause massive damage to large parts of the economy."
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