Germans buy or build home ownership around nine years earlier than they did a decade ago. For this, the loan amounts are significantly higher than they were then.

Almost one in five properties financed in 2017 was acquired with a view to renting it out later.

Se things can change fundamentally in a fraction of a second. After a period of ten years, even the smallest changes can often be seen very clearly. This can also be seen with a view to real estate financing. Nowadays, for example, home ownership is bought or built around nine years earlier than it was a decade ago. In addition, the loan amounts taken out are much higher. The financial services provider Dr. Klein now found in an analysis of more than 100,000 initial financings from 2007 and 2017.

Accordingly, house builders and buyers borrowed an average of 100,000 euros more in the previous year than ten years ago. This is likely mainly due to the significantly higher real estate prices in this country. According to data from the Deutsche Bundesbank, based on information from the analysis company Bulwien Gesa, the real estate price index measured by the central bank rose by 46 percent in the German districts from 2007 to 2017 and by as much as 70 percent in the cities. The price index of the Association of Pfandbrief Banks for owner-occupied residential property has increased since 2007 by 34 percent for owner-occupied homes, by 41 percent for condominiums and by an overall average of 36 percent for owner-occupied residential property.

And what does it look like in detail? On average, house builders raised around 336,000 euros last year to build their own property. Ten years earlier it was 210,000 euros. The home buyers seem a little more economical, say the experts at Dr. Small. The bottom line was that your loan amount rose on average from 179,000 to 278,000 euros in 2017. For apartments, too, buyers are currently digging almost half more into their pockets than before: The average loan broke the 200,000 euros limit in 2017, compared to 136,000 euros in 2007. Nevertheless, Germans are apparently drawn to their own four walls earlier and earlier.

Share of rented properties is increasing

Ten years ago, German citizens would not have started purchasing residential property until they were around 48, according to Dr. Small. In 2017, builders and buyers were on average almost a decade younger and bought their first home at an average of 39 years. In contrast, the proportion of financed new or existing properties remained the same. According to the analysis, a little more than a quarter of Germans built the property themselves on average both in 2007 and in the previous year, while the other 75 percent would have decided to buy an apartment or a house.

Another result of the study: Less real estate is being used, the proportion of rented properties is increasing. According to the results of the financial service provider Dr. Klein acquired an average of 17 percent or almost a fifth of the real estate financed in 2017 for the purpose of renting. This means that the majority of mortgage lenders still use the living space for themselves, but the proportion of landlords has increased significantly compared to 2007. At that time it was just 8.25 percent.

The experts at Dr. Small especially in the low interest rates. This made real estate investments not only interesting for owner-occupiers. Investors also took advantage of the cheap financing options and speculated on a good return through rental income and further increases in real estate prices, it is said. According to data from FMH-Finanzberatung, the mortgage interest rate for a ten-year fixed interest period is a good 1.4 percent on a national average. For comparison: in 2007 the high was around 5.3 percent. According to the FMH, borrowers currently have to pay around 1.9 percent for 15 years of fixed interest and around 2.1 percent for 20 years.