An IW study concluded that purchasing a home for personal use is significantly less attractive than renting the same property in Germany. The result warns of weakening demand for owner‑occupied housing, which could depress mortgage lending, slow construction activity and reduce tax revenues linked to property transactions. Institut der deutsche Wirtschaft (IW), German households, policymakers and mortgage lenders. Policymakers may review housing subsidies and mortgage tax incentives; lenders could adjust credit standards; rental market demand is likely to rise. The IW analysis compares the total cost of ownership—including mortgage interest, maintenance and foregone rental income—with the cost of renting comparable accommodation. It concludes that, under prevailing interest rates and tax treatment, owning a home yields a lower net financial benefit than renting for the typical household. This shifts the cost‑benefit calculus that has long favoured property acquisition in Germany, potentially reshaping housing demand and related financial flows.
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