In recent years, the dream of owning a home has seemed almost unattainable for many. High purchase prices, rising interest rates and exploding construction costs made buying a property almost impossible for the average earner. However, real estate has become more affordable again. The market has eased noticeably – and as a result, opportunities for prospective buyers are increasing again.
What the affordability index reveals
According to a recent analysis by loan broker Interhyp, buying a property has become easier again in many regions of Germany. The basis for this is a new “affordability index” developed by Interhyp together with the German Economic Institute in Cologne. It shows how affordable home ownership is by comparing local real estate prices with the respective incomes.
This is based on an affordability index, which sets the monthly loan installment in relation to the average net income of a model household. If the index is above 100 points, the property purchase is considered affordable. The value is currently slightly above this mark nationwide – a good sign.
The index shows: Average buyers currently have to spend around 35% of their income on financing. This is exactly the threshold value that experts classify as justifiable. This means that many households are now once again in a position to realistically consider buying a property – a development that is favored by several factors.
Prices, interest rates, income – the three relief factors
Stable interest rates, moderately lower prices and rising incomes have improved the general conditions. The independent Stiftung Warentest also confirms this positive development on the real estate market in a recent assessment. In particular, buyers with sufficient equity – on average around 20 to 30 percent of the purchase price – are currently benefiting from good financing conditions.
However, affordability varies greatly from region to region. Buying a property is currently particularly attractive in smaller towns such as Holzminden, where households only have to pay around 20 percent of their income for the installment. Cities such as Chemnitz and Ingolstadt are also doing well. The situation has also improved slightly in large cities such as Hamburg and Frankfurt, while buying a property in the Munich area remains a financial challenge despite high incomes.
Time window with expiration date?
The situation has eased in almost all regions since 2023 – especially in comparison to the peak prices in 2022. The current environment therefore offers opportunities that have not existed in this form for a long time.
However, this phase is unlikely to last. The persistently low construction interest rates could boost demand again – while supply remains low, as too little is still being built. In 175 out of 400 districts, the affordability index has recently even fallen slightly again – a possible signal of an imminent trend reversal.
Do you want to fulfill your dream of owning your own home – but safely, well advised and with a strong partner at your side? As experienced real estate agents, we will accompany you on the way to your own four walls – personally, competently and with a regional network. Arrange your individual buyer consultation now and take the first step towards your new home.
Notes
The generic masculine is used in this text to improve readability. Female and other gender identities are explicitly included where this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.
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