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Situation in Germany: House prices are going down the last few months, but much more slowly than they consistently rose during the preceding 15 years. At the sa

Situation in Germany: House prices are going down the last few months, but much more slowly than they consistently rose during the preceding 15 years. At the same time interest has sharply risen. Compared to prices there's a much bigger decrease in new construction, which I'd interpret as people increasingly not pursuing houses and instead piling onto the rent market. Urban/suburban/"sprawl" houses were basically a DI(preferably-NK-and-wealthy-parents-chipping-in) and beyond thing before, I'd suspect houses will continue to shrink while drifting even further up the income distribution and everyone else must rent for life - at an average rent/income ratio of around one third which has only ever been going up, and is of course much higher for non-DI households. Home ownership rate has always been falling and continues to do so (fell below 50 % in 2022). It'll get a lot lower when boomers start leaving their houses (feet first most likely), because baby boomers have far high home ownership rate than following generations. And with recent changes to the way houses are legally valuated and inheritance taxation I'd suspect many kids of baby boomers can't actually afford to inherit their parents houses and will have to sell. I dunno where this is supposed to converge to. Everyone renting at >50 % of net income (which is already not at all uncommon, especially for singles in cities) from huge housing companies?

MarkPNeyer 4y ago
Hi, thanks for sharing - do you mind explaining what DI and NK mean? Thank you :)
- Terretta 4y ago
  DINK == Dual Income No Kids
- TacticalCoder 4y ago
  DINK means "Double Income No Kids".
dzonga 4y ago
I think for you - Germany might be an anomaly since in Germany you guys have strong rental protections. and rentals can have long leases i.e 3+ years. whereas in the UK / US a lease usually last a year. in london with average leases being 6 months to a year. in the UK new builds are inflated due to gvt shenanigans
- formerly_proven 4y ago
  That's true, though the only protection for new tenants is rent control (the type where rents can't exceed a reference rent by ~10%), which is active in most cities - but is also generally ignored (~80 % of new leases violate these laws). New construction, modernized (also "modernized") and first-time-leased flats are excluded as well, and if the previous tenant overpaid, rent control is suspended as well.
Cthulhu_ 4y ago
> Situation in Germany: House prices are going down the last few months, but much more slowly than they consistently rose during the preceding 15 years. At the same time interest has sharply risen. That's the case in NL as well; the causes are multi-fold, housing prices have consistently gone up in the past decade, while mortgage interest rates have gone down, meaning it's more attractive and interesting to get a house and mortgage now and fix the interest rate. But the other issue there is a housing shortage, because population increase is not slowing down. But the other issue is that houses aren't being built fast enough, for diverse reasons - NIMBY, having to give up farmland or nature for houses, counties that want pretty housing estates instead of functional apartment buildings (because 'ugly' houses attract undesireables), and new nitrogen laws making getting licenses more difficult. And now there's sudden inflation due to a sudden change in situation (to put it mildly), which triggered the EU to rapidly increase interest rates (I'm no economist, I'm not sure how the two are related), which triggered mortgage rates to increase. Given people were already borrowing the max amount they could, if the interest rates suddenly go up, a gap appears which caused the reduction in interest in buying a house, lowering demand. The other one is that people stopped looking for houses because their energy bill suddenly tripled or worse.
- dzonga 4y ago
  people in the NL are extremely lucky compared to other developed countries. high quality housing stock at decent prices, compared to the UK / US etc.
  - WeylandYutani 4y ago
    The Netherlands ultimately decided on socialism which means that even in Amsterdam a lot of the houses are on government rent control. Also mixed neighborhoods with low income and middle income households so that you never get into a "banlieue" situation. The government decided what to build, where to build and for how much.
WastingMyTime89 4y ago
> House prices are going down the last few months, but much more slowly than they consistently rose during the preceding 15 years. You are looking at nominal prices. Inflation adjusted real estate prices crashed hard. They literally went down when everything else rose 8%.
schroeding 4y ago
> Everyone renting [...] from huge housing companies? In cities like Munich, where the real estate is extremly valuable, definitely. The increase in inheritance tax you mentioned makes it very unattractive to not just sell the house to the highest bidder immediately, which in most cases will be one of the large housing companies. For small tenements, it's very challenging to generate enough rental income to offset the inheritance tax in a single lifetime, especially if the new owners want to keep rents low.

MarkPNeyer 4y ago

Hi, thanks for sharing - do you mind explaining what DI and NK mean? Thank you :)

Terretta 4y ago
DINK == Dual Income No Kids
TacticalCoder 4y ago
DINK means "Double Income No Kids".

dzonga 4y ago

I think for you - Germany might be an anomaly since in Germany you guys have strong rental protections. and rentals can have long leases i.e 3+ years. whereas in the UK / US a lease usually last a year. in london with average leases being 6 months to a year. in the UK new builds are inflated due to gvt shenanigans

formerly_proven 4y ago
That's true, though the only protection for new tenants is rent control (the type where rents can't exceed a reference rent by ~10%), which is active in most cities - but is also generally ignored (~80 % of new leases violate these laws). New construction, modernized (also "modernized") and first-time-leased flats are excluded as well, and if the previous tenant overpaid, rent control is suspended as well.

Cthulhu_ 4y ago

> Situation in Germany: House prices are going down the last few months, but much more slowly than they consistently rose during the preceding 15 years. At the same time interest has sharply risen. That's the case in NL as well; the causes are multi-fold, housing prices have consistently gone up in the past decade, while mortgage interest rates have gone down, meaning it's more attractive and interesting to get a house and mortgage now and fix the interest rate. But the other issue there is a housing shortage, because population increase is not slowing down. But the other issue is that houses aren't being built fast enough, for diverse reasons - NIMBY, having to give up farmland or nature for houses, counties that want pretty housing estates instead of functional apartment buildings (because 'ugly' houses attract undesireables), and new nitrogen laws making getting licenses more difficult. And now there's sudden inflation due to a sudden change in situation (to put it mildly), which triggered the EU to rapidly increase interest rates (I'm no economist, I'm not sure how the two are related), which triggered mortgage rates to increase. Given people were already borrowing the max amount they could, if the interest rates suddenly go up, a gap appears which caused the reduction in interest in buying a house, lowering demand. The other one is that people stopped looking for houses because their energy bill suddenly tripled or worse.

dzonga 4y ago
people in the NL are extremely lucky compared to other developed countries. high quality housing stock at decent prices, compared to the UK / US etc.
- WeylandYutani 4y ago
  The Netherlands ultimately decided on socialism which means that even in Amsterdam a lot of the houses are on government rent control. Also mixed neighborhoods with low income and middle income households so that you never get into a "banlieue" situation. The government decided what to build, where to build and for how much.

WastingMyTime89 4y ago

> House prices are going down the last few months, but much more slowly than they consistently rose during the preceding 15 years. You are looking at nominal prices. Inflation adjusted real estate prices crashed hard. They literally went down when everything else rose 8%.

schroeding 4y ago

> Everyone renting [...] from huge housing companies? In cities like Munich, where the real estate is extremly valuable, definitely. The increase in inheritance tax you mentioned makes it very unattractive to not just sell the house to the highest bidder immediately, which in most cases will be one of the large housing companies. For small tenements, it's very challenging to generate enough rental income to offset the inheritance tax in a single lifetime, especially if the new owners want to keep rents low.