Germany ranks last in Europe in terms of home ownership. Well over half of Germans live in rented accommodation although most Germans would like to live in their property.[1] The low supply of living space and the high price level for property, coupled with increased interest rates, make it difficult to become an owner in Germany. The house ownership rate could receive a boost from real wage growth and the roughly two-year decline in property prices. This has led to an increase in the affordability of property.

The affordability of a property is measured using the price-to-income ratio (PIR). Last year, an employee spent 8.5 times an average annual gross salary to purchase a detached single-family house with a living space of around 125 square metres in a medium location with a garage. Since 2012, the PIR has risen continuously until it reached almost 11 gross annual salaries in 2022; this increase only ended in 2023.

Thuringia and Bavaria form the respective extremes

At a regional level, the latest wage trends and price trends for houses have increased affordability overall but have hardly changed the relationship between the federal states: Bavaria remains the most expensive federal state for those earning an average salary with a PIR of 15.7 and Thuringia the most affordable at 5.2 (cf. map). This goes hand in hand with the lowest price level.
 

Turnaround in the ownership rate through targeted promotion

The fall in prices in almost all federal states, except for Bremen and Mecklenburg-Western Pomerania, led to a slight increase in the transaction volume in 2024. Most recently, it had fallen by over 30% for two years in a row. Whether the higher affordability heralds a turnaround in the purchase of residential property will be influenced not only by the dynamics of house prices, but also by the further development of interest rates and, above all, by the political measures agreed in the new coalition government to promote housing. Support for home ownership – also regarding the growing importance of real estate as a form of retirement pension - should be particularly focussed on younger and middle-income groups to increase the home ownership rate in the long term.

Other figures can be found here.

[1]  Rheinische Post (21.05.2024): Umfrage: Wunsch nach Eigenheim weiterhin hoch, aber häufig nicht erfüllbar.; Der Spiegel (03.04.2023): Spiegel-Umfrage: Wie junge Erwachsene wohnen wollen.; Pestel Institut (2025): Schutz vor Altersarmut – Wohneigentum in Deutschland. Im Auftrag des Bundesverbands Deutscher Baustoff-Fachhandel (BDB) e.V., Hannover.