When your own house is worth less and less

While affordable apartments are becoming rare in metropolitan areas, houses are not being bought elsewhere. The falling prices force some changes in life planning.

Empty house in Loitz (Vorpommern-Greifswald).  There are currently houses there from 15,500 euros.

Ein a single family home for only 70,000 euros? Big garden, a lake nearby? Is there. Really! You just have to go to Vöhl in North Hesse, or to Wittmund in East Frisia or Gardelegen in the Altmark. Anyone who browses through advertisements soon realizes that there is not a real estate boom everywhere in Germany.

There are many places – in the country, in small towns – where people shrug their shoulders when they hear words like housing shortage, rental growth and displacement. They look at their house and worry that its value continues to decline.

Among other things, it makes some life plans waste. “The hope was with many: I’ll sell my house for 200,000 euros and buy an apartment in the next town,” says the sociologist Rolf Heinze. That works well in cities like Münster, but not in regions like the southern Harz.

A building site in Munich can cost 100 times as much as in the east

In the east and other structurally weak regions, other factors exacerbate the problems. After years of unemployment, residents are often unable to get a loan to convert their home for old age. In an unfavorable region, a property is therefore not recommended as a pension plan.

“They have markets that have had price increases of 80 and 90 percent since 2010 and they have markets where practically nothing has happened,” said Franz Eilers, real estate expert at VDP Research, an institution of Pfandbrief banks and Volks- and Raiffeisen banks. If you take the rising consumer prices into account, many houses and apartments in rural areas have lost real value in recent years.

A building site in Munich can cost 100 times as much as in parts of eastern Germany, where in some places every tenth apartment is empty. According to data from the Federal Institute for Building, Urban and Spatial Research, those who rent an apartment in Bavaria’s capital paid 16.65 euros per square meter last year – in Wunsiedel in the Fichtelgebirge and in Holzminden in the Weser Uplands it was 4.50 euros.

According to experts, some small town mayors are exacerbating the drop in prices. “We build too much in the country,” says Ralph Henger, economist at the employer-related Institute of the German Economy in Cologne. Shrinking communities fought ruinous competition with building land at dumping prices. Every third new development area is uneconomical in the long term. The planned child benefit will increase the urban sprawl.

It is better if cities support families who move into vacant houses in the center of town or build new ones in their place. Some municipalities in Bavaria, Baden-Württemberg, Lower Saxony and North Rhine-Westphalia have already tried this.

From the point of view of the institute, building sites in the country could also be restricted by trading in certificates. Associations and initiatives that save historic houses in town centers should be supported by citizen funds.

However, such a policy also exacerbates the problem because it encourages immigration to regional centers and metropolises and rural regions lose their importance as a relief. Under these circumstances, a new development area that is uneconomical for one municipality can also relieve another. It is important, however, that new development areas do not end up being vacant and that prices remain reasonable.

Last but not least, a home is also a mixture of investment and consumer goods, because after all it is also “worn out”.