IW Study: Affordable Single-Family Homes Only in Rural Areas

How the calculations were made

The disparity is particularly stark in Bavaria: according to the study, the ten most expensive municipalities and cities are all located in Munich and its surrounding area in the Alpine foothills. At the top is the district of Garmisch-Partenkirchen with an index value of 53 – there, the model household would have to spend two-thirds of its net income solely on the monthly mortgage payment. In tenth place is the district of Ebersberg, east of Munich, where the payment consumes more than half (54 percent) of monthly income.

Top spot: Garmisch-Partenkirchen

Outside Bavaria as well, homeownership remains out of reach for many. In Berlin, Bavaria, and Hamburg, the monthly burden averages about 40 percent or more of net income. In eleventh place follows Potsdam (index value 66) as the first eastern German city – the Brandenburg state capital on the outskirts of Berlin is particularly popular among the wealthy.

The situation is favorable in rural areas: single-family homes are most easily affordable in the district of Steinburg in Schleswig-Holstein (index value 187) and in the district of Rhön-Grabfeld, Bavaria's northernmost district in Lower Franconia (184). There, the payment requires less than one-fifth of net income. At the state level, single-family homes are most affordable in Saarland, Schleswig-Holstein, and Saxony-Anhalt; in the cheapest federal states, a typical model household spends just over a quarter of net income on the monthly payment.

Affordable areas: The countryside wins

Considering population distribution, less than half of the model households live in municipalities with affordable prices. Interhyp CEO Jörg Utecht stated: "About 45 percent of the examined model households do not live in any of the top seven metropolitan areas or their surroundings, and therefore in a region where purchasing a single-family home is affordable."

Voigtländer sees this as a societal problem. He writes together with his colleagues: "These are values far beyond any customary market affordability limit and effectively exclude the model household from purchasing a single-family home." He also warns: "It is simply not reality that the median household can actually acquire homeownership, which is incidentally a huge social policy problem."

Another finding of the study: households can often only afford the high prices through assets from inheritances or gifts. Voigtländer: "Da stehen oftmals Erbschaften oder Schenkungen, auf jeden Fall Vermögen dahinter, dass diese Immobilien überhaupt gekauft werden können."

Little prospect of relief

According to the IW economist, no improvement is in sight: "Ich rechne weder mit spürbar besseren Finanzierungskonditionen noch mit einem massiven Rückgang bei den Preisen," Voigtländer is quoted as saying in the Interhyp statement. Those hoping for cheaper times may therefore need to be patient.

The study thus reveals not only an economic but also a structural problem: in the economically strong centers and their surroundings, even households with above-average income often can no longer afford a home of their own – affordable homeownership is effectively limited to rural, often structurally weak regions.