5 ms·

German prices are extremly high compared to the sallary. If you want to buy a house in a German major city, you would have to take a credit for your whole life.

German prices are extremly high compared to the sallary. If you want to buy a house in a German major city, you would have to take a credit for your whole life. Really everyone is complaining. It is not affordable. So even persons with high income like doctors or engineers are struggeling. So often you just hear, the only chance is to inherit it...

chii 5y ago
> It is not affordable. is renting not an option? Why is only purchasing counted?
- ghosty141 5y ago
  The majority of adults rent their apartments/homes.
- tigershark 5y ago
  Renting is the equivalent of throwing away your money paying more than a mortgage in a lifetime and without having anything tangible in your hands after.
  - Ozzie_osman 5y ago
    That's not always true. Renting can definitely be a better decision from a purely economic perspective (just Google "rent vs buy calculator" to see why).
  - fxtentacle 5y ago
    It depends. I would have to pay my current rent for 83 years to match the purchase price of a similar house. Plus if I rent it, then repairs need to be paid for by the housing company. If I buy, then I'm paying for them. So with the current high housing asset prices and low rental prices, purchasing a house doesn't make financial sense.
    - fragmede 5y ago
      There's a line where if makes sense to own vs rent, and sometimes local market conditions will land you in one camp vs the other. But at the end of the decade, if you're paying, eg $2,000/month in rent vs mortgage, after 30 years, one person owns their house, the other can look forwards to paying rent for another 30 years.
      - hnaccount_rng 5y ago
        Right now you'd neither a) after 30 years own the house at 2k/month and b) would have to pay for all the renovations within the 30 years (and I'd expect at least one pipe burst in that time). There are advantages of just renting. Even beyond the "I can just move if I have to" part.
      - chii 5y ago
        > $2,000/month in rent vs mortgage the mortgage is not 100% comparable to the rent, since not 100% of the mortgage is unrecoverable cost, unlike rent. Some percentage of the mortgage payment is the principle payment. If you subtract this principle payment, and add in the cost of capital for the mortgage (which is the opportunity cost of the initial deposit), you can then compare the cost of mortgage with rent. In most cases, rent should be cheaper (but of course, not always). A nice rule of thumb is to have a 5% rule - if you can rent annually for less than 5% of the cost of the property, you'd be ahead financially.
      - rosndo 5y ago
        Money you didn’t waste on buying a house could’ve been invested in less risky faster-appreciating assets like index funds. In many cities where buy prices are high the renter will end up with a higher net worth in the end.
  - cycomanic 5y ago
    That's what's called a "Milchmädchen Rechnung" (milkmaid calculation) in German. It highly depends on the interest rate and the property market development. Now it has been true in recent years, largely due to the artificially low interest rates and the large housing demand. However, it could (and has historically before) make much more sense to invest your capital otherwise and rent instead.
  - fulafel 5y ago
    It's a different model, like buying groceries vs loaning money to get a farm. There are responsibilities, tied capital, operating risks that may devalue the asset or render it useless, liquidity and asset price risks, and known money sinks and on the upside you may have a valuable asset still on your hands when you move on or kick the bucket. And upside possibilities of course too like windfall from apprecating asset prices. The main thing that makes renting a worse deal in many jurisdictions are the tax subsidies towards home ownership and taxation of rentals, otherwise in a working market it's a little rentiers profit and a lot of risk pricing / speculation. Generally renting may take a smaller slice of your cash flow and allow you to invest the difference which will decide which will affect which scenario will come out $$ wise ahead in the endgame.
  - rosndo 5y ago
    This is ridiculous, there are many cities where it’s vastly cheaper to rent than to own. Look at London or Barcelona for example. Landlords in these cities aren’t hoping to come anywhere near covering their mortgages with rent payments, they are hoping to profit from real estate appreciation. This is really basic economics, it’s incredible to see people railing against this on HN. Even the home-ownership obsessed US is full of cities where it’s a vastly better financial decision to rent instead of buying.
    - tigershark 5y ago
      I live and own an house in London. Rents are absolutely crazy here, you have no idea what you are speaking about.
      - rosndo 5y ago
        Oh please, I pay 6000GBP a month for my apartment. I know all about crazy rents, I also know that the purchase price would be disproportionally high compared to the rent I’m paying. Most landlords here are betting on property values continuing to grow, they’ll never turn a profit on rents.
nivenkos 5y ago
And there's a huge disparity between those who own their own homes and those who rent. It's close to Feudalism. I'd note that Doctors and Engineers don't really get high salaries compared to the US though. Europe is all about landlordism and inheritance.
- MichaelRazum 5y ago
  You can earn quite a lot as a Doctor (compared to the other population). The situation was much better about 10 years ago on the real estate market. The main problem in my opinion regarding Germany is that it becomes really hard to accumulate wealth, you have high taxes, real estate prices are high and the consumer prices are rising. So inheritance plays a really big role.
  - luckylion 5y ago
    > The main problem in my opinion regarding Germany is that it becomes really hard to accumulate wealth That's by design, isn't it? You're not really supposed to build up private wealth, you're supposed to fund social security systems and rely on them when in trouble. I remember some high-ranking politician (I believe SPD, but my memory is weak) said in regards to Germany's low personal wealth that in Germany your wealth is having a social system you can rely on (and thus you don't need to have personal wealth).
- avgcorrection 5y ago
  Still going on about the “landed aristocracy”, I see. No developed country serves working people. And it isn’t made to serve the aristocracy, either. Businesses and business interests rule over all. That much the US and the apparent monolith of Europe has in common, at least. The only difference is that professionals—those with “careers”—are probably paid less in Europe in general compared to their peers in the US. Which is probably the reason why there is so much seething on HN about how Europe is oppressing people—Europe (or at least Western/Northern Europe) is relatively egalitarian overall, but tech nerds aren’t paid five times as much as their plumber, which is a real injustice.
cycomanic 5y ago
Prices are high in pretty much any big city in Europe. You say to buy a house in Berlin you have to get a mortgage for your life. Sure but even with a life mortgage it's impossible to buy a house in London, New York or SF. It's a function of how incredibly high wealth disparity is. Go to the richest part of town in any big city sometime in the evening. >70% (often more than 90%) of the lights are off, because nobody is home in these multimillion $ homes, because they are 2nd, 3rd or 4th home. So the people who can afford houses that >90% of the people can never afford, can buy many of these without blinking an eye.
alkonaut 5y ago
Isn’t “take credit for your whole life” expected for most homes? The expected market price of a home in terms of rent should be “what you can afford”, and with that argument the expected purchase price would be the number that makes the capital cost of a loan the same as the rent (minus some maintenance and other factors). If interest rates are tiny then the expected mortgage for a house will be huge. Especially if there are no regulations requiring the length of mortgages.

chii 5y ago

> It is not affordable. is renting not an option? Why is only purchasing counted?

ghosty141 5y ago
The majority of adults rent their apartments/homes.
tigershark 5y ago
Renting is the equivalent of throwing away your money paying more than a mortgage in a lifetime and without having anything tangible in your hands after.
- Ozzie_osman 5y ago
  That's not always true. Renting can definitely be a better decision from a purely economic perspective (just Google "rent vs buy calculator" to see why).
- fxtentacle 5y ago
  It depends. I would have to pay my current rent for 83 years to match the purchase price of a similar house. Plus if I rent it, then repairs need to be paid for by the housing company. If I buy, then I'm paying for them. So with the current high housing asset prices and low rental prices, purchasing a house doesn't make financial sense.
  - fragmede 5y ago
    There's a line where if makes sense to own vs rent, and sometimes local market conditions will land you in one camp vs the other. But at the end of the decade, if you're paying, eg $2,000/month in rent vs mortgage, after 30 years, one person owns their house, the other can look forwards to paying rent for another 30 years.
    - hnaccount_rng 5y ago
      Right now you'd neither a) after 30 years own the house at 2k/month and b) would have to pay for all the renovations within the 30 years (and I'd expect at least one pipe burst in that time). There are advantages of just renting. Even beyond the "I can just move if I have to" part.
    - chii 5y ago
      > $2,000/month in rent vs mortgage the mortgage is not 100% comparable to the rent, since not 100% of the mortgage is unrecoverable cost, unlike rent. Some percentage of the mortgage payment is the principle payment. If you subtract this principle payment, and add in the cost of capital for the mortgage (which is the opportunity cost of the initial deposit), you can then compare the cost of mortgage with rent. In most cases, rent should be cheaper (but of course, not always). A nice rule of thumb is to have a 5% rule - if you can rent annually for less than 5% of the cost of the property, you'd be ahead financially.
    - rosndo 5y ago
      Money you didn’t waste on buying a house could’ve been invested in less risky faster-appreciating assets like index funds. In many cities where buy prices are high the renter will end up with a higher net worth in the end.
- cycomanic 5y ago
  That's what's called a "Milchmädchen Rechnung" (milkmaid calculation) in German. It highly depends on the interest rate and the property market development. Now it has been true in recent years, largely due to the artificially low interest rates and the large housing demand. However, it could (and has historically before) make much more sense to invest your capital otherwise and rent instead.
- fulafel 5y ago
  It's a different model, like buying groceries vs loaning money to get a farm. There are responsibilities, tied capital, operating risks that may devalue the asset or render it useless, liquidity and asset price risks, and known money sinks and on the upside you may have a valuable asset still on your hands when you move on or kick the bucket. And upside possibilities of course too like windfall from apprecating asset prices. The main thing that makes renting a worse deal in many jurisdictions are the tax subsidies towards home ownership and taxation of rentals, otherwise in a working market it's a little rentiers profit and a lot of risk pricing / speculation. Generally renting may take a smaller slice of your cash flow and allow you to invest the difference which will decide which will affect which scenario will come out $$ wise ahead in the endgame.
- rosndo 5y ago
  This is ridiculous, there are many cities where it’s vastly cheaper to rent than to own. Look at London or Barcelona for example. Landlords in these cities aren’t hoping to come anywhere near covering their mortgages with rent payments, they are hoping to profit from real estate appreciation. This is really basic economics, it’s incredible to see people railing against this on HN. Even the home-ownership obsessed US is full of cities where it’s a vastly better financial decision to rent instead of buying.
  - tigershark 5y ago
    I live and own an house in London. Rents are absolutely crazy here, you have no idea what you are speaking about.
    - rosndo 5y ago
      Oh please, I pay 6000GBP a month for my apartment. I know all about crazy rents, I also know that the purchase price would be disproportionally high compared to the rent I’m paying. Most landlords here are betting on property values continuing to grow, they’ll never turn a profit on rents.

nivenkos 5y ago

And there's a huge disparity between those who own their own homes and those who rent. It's close to Feudalism. I'd note that Doctors and Engineers don't really get high salaries compared to the US though. Europe is all about landlordism and inheritance.

MichaelRazum 5y ago
You can earn quite a lot as a Doctor (compared to the other population). The situation was much better about 10 years ago on the real estate market. The main problem in my opinion regarding Germany is that it becomes really hard to accumulate wealth, you have high taxes, real estate prices are high and the consumer prices are rising. So inheritance plays a really big role.
- luckylion 5y ago
  > The main problem in my opinion regarding Germany is that it becomes really hard to accumulate wealth That's by design, isn't it? You're not really supposed to build up private wealth, you're supposed to fund social security systems and rely on them when in trouble. I remember some high-ranking politician (I believe SPD, but my memory is weak) said in regards to Germany's low personal wealth that in Germany your wealth is having a social system you can rely on (and thus you don't need to have personal wealth).
avgcorrection 5y ago
Still going on about the “landed aristocracy”, I see. No developed country serves working people. And it isn’t made to serve the aristocracy, either. Businesses and business interests rule over all. That much the US and the apparent monolith of Europe has in common, at least. The only difference is that professionals—those with “careers”—are probably paid less in Europe in general compared to their peers in the US. Which is probably the reason why there is so much seething on HN about how Europe is oppressing people—Europe (or at least Western/Northern Europe) is relatively egalitarian overall, but tech nerds aren’t paid five times as much as their plumber, which is a real injustice.

cycomanic 5y ago

Prices are high in pretty much any big city in Europe. You say to buy a house in Berlin you have to get a mortgage for your life. Sure but even with a life mortgage it's impossible to buy a house in London, New York or SF. It's a function of how incredibly high wealth disparity is. Go to the richest part of town in any big city sometime in the evening. >70% (often more than 90%) of the lights are off, because nobody is home in these multimillion $ homes, because they are 2nd, 3rd or 4th home. So the people who can afford houses that >90% of the people can never afford, can buy many of these without blinking an eye.

alkonaut 5y ago

Isn’t “take credit for your whole life” expected for most homes? The expected market price of a home in terms of rent should be “what you can afford”, and with that argument the expected purchase price would be the number that makes the capital cost of a loan the same as the rent (minus some maintenance and other factors). If interest rates are tiny then the expected mortgage for a house will be huge. Especially if there are no regulations requiring the length of mortgages.