When is it really worth buying a property?

Many Germans still want their own house today. But property prices are rising, especially in metropolises and holiday regions. So is renting the better alternative?

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AEven if many long for their own four walls, reason often has to contradict this wish. Often the necessary financial resources or good opportunities are lacking. And in some cases, due to the already high real estate prices, it can be far more worthwhile to just rent instead of buying. However, the low interest rate level is often the tip of the balance when it comes to making the purchase more attractive.

“In spite of the fact that property prices have already risen significantly in this country, buying them is usually still more attractive than renting because of the low mortgage rate – provided that the apartment or house is being used”, says Max Herbst from FMH-Finanzberatung. This applies even if there is hardly any equity available and almost everything has to be financed. Herbst makes a calculation: If a property costs 400,000 euros, the monthly rate is 1,700 euros – with 15-year fixed interest of 2.2 percent and a repayment of 3 percent. This includes an interest component of around 750 euros, which is simply gone month after month, while every euro more in repayment reduces the debt. This part of the rate can be compared with the rent, because it is lost like the interest.