Housing Atlas 2021: Where average earners in Germany can still afford a home
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The single-family house with a garden? That used to be the achievable dream of every worker. But today he smashed himself for many before the career begins. Only in 149 of the 401 German cities and districts does an average income suffice for a home.
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The average German home, inhabited by oneself, preferably with a garden, currently has a living space of 140 square meters. If you want to afford something like this in Germany, you have to pay around including ancillary costs such as real estate transfer tax and notary 376.000 Euro put …. on the table. Assuming that you could finance 20 percent of this with equity, this leaves a loan amount of 300,887 euros. With a good real estate loan with one percent interest per year and 2.5 percent repayment at the beginning, this would result in a monthly loan installment of 878 euros.
For the majority of Germans that is already too much. The average full-time employee went home in 2020 with EUR 3,975 gross per month. That leaves 2472 euros net if we assume a childless single with church membership.
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Experts advise that you should spend a maximum of 30 percent of your net income on rent / real estate loans. That would be around 742 euros for the average German earner – less than what he would have to pay for the average home. Worse still: In our sample calculation, we assumed that you are buying a house that is already standing without a plot of land. For example, if you just buy the plot of land and then build the house yourself or buy a house with a garden, it can get even more expensive.
Only 15 major German cities are affordable for average earners
With a maximum monthly rate of 742 euros, the average earner from our example could still afford a house in Germany – just not everywhere. In 149 of the 401 German cities and districts, the monthly rates for a home of 140 square meters would be lower. These include many rural areas, for example in Saxony and Saxony-Anhalt, but also large areas in Lower Saxony, North Rhine-Westphalia, Hesse, Rhineland-Palatinate and Saarland. The average purchase prices per region are taken from the Postbank Residential Atlas 2021.
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It will be difficult in big cities. Only in 15 would it be possible to finance a home with an average salary as a single. These include most of the cities in the Ruhr area and its catchment area, such as Duisburg, Bochum, Wuppertal and Mönchengladbach, but also east German cities such as Chemnitz and Magdeburg and Bremerhaven in the north of the republic. There are also 14 medium-sized cities, i.e. with a maximum of 100,000 inhabitants such as Frankfurt an der Oder, Pirmasens, Cottbus, Suhl, Weimar and Eisenach.
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Many regions are also closed to high earners
Unsurprisingly, there are more regions open to high earners in Germany, but the choice is more limited than you might think. As a high earner, we have defined a single who lives on the limit of the top tax rate. The applies in 2021 from 57,950 euros taxable income. Including various allowances, this results in roughly a gross income of 68,000 euros per year. This in turn leads to a monthly net income of around 3300 euros, which allows a maximum monthly rate of 992 euros for the real estate loan.
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Paycheck: To the gross-net calculator 2021
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That in turn is enough for 255 of the 401 German cities and districts, i.e. just a little more than half. High-earners will find around 140 square meters of houses in some parts of Bavaria and Baden-Württemberg, in the other catchment areas around Cologne, Düsseldorf, Hamburg, Berlin and Frankfurt.
From the big cities, 16 more are added to the selection. The largest among them are Leipzig, Dortmund, Essen, Bremen and Bielefeld, in the east also Halle an der Saale and Erfurt. Nine other medium-sized towns are also open to high earners, including Schwerin, Flensburg, Worms and Schweinfurt. But even for people who pay the top tax rate, rural regions still dominate. The largest are the Aachen city region and the Mettmann district between Düsseldorf and Cologne.
37 Big cities are only for the rich
For 148 regions in Germany you have to earn well above the limit of the top tax rate in order to be able to afford a 140 square meter house. The most expensive is of course Munich, where such a property costs 1.34 million euros. That would result in a monthly rate of 3119 euros. But also the district of North Friesland (the section of which is increased enormously through Sylt), and the districts of Munich, Starnberg and Miesbach around the Bavarian capital have cracked the million mark.
37 other large cities can only be financed by the rich. In addition to Munich, this also includes all the other “Big 7”, ie Berlin, Hamburg, Cologne, Frankfurt, Düsseldorf and Stuttgart, as well as Bonn, Münster, Karlsruhe, Nuremberg and Dresden, for example. But even many rural regions, especially on the North and Baltic Seas, are unaffordable even for high earners. However, the average here is often raised by the high prices of the islands.
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What you need to know about our sample calculation
What we are presenting to you here is of course only an example calculation. There are many parameters that you can shift in order to still be able to afford a home in the region you want. The simplest would be not to finance the house with just a single income. Couples in which both work have completely different financial options without having to expend themselves.
Plus, you don’t have to live in 140 square feet just because that’s the average size. If you don’t have enough space, owning a home will be cheaper – it might even help finance a garden.
The third adjustment screw would be the credit terms. As I said, we calculated with 1 percent interest and 2.5 percent initial repayment. While we would advise against lowering the repayment rate if you want the house to be paid off before retirement, banks can certainly be found that offer lower interest rates. Also, the limit of 30 percent or less of your net income on the loan is only a recommendation. If you can and want to live more frugally, this limit can simply be increased individually.
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