What is Actually Cheaper in Germany, Renting or Buying?

 In the last 70 years, buying a house in Germany is seems to be the cheapest. A decade ago, buyers had to pay an average of 5.04 percent interest, whereas it had dropped to 1.67 percent in the last year. 

The IWD market research institute surveyed 401 different districts across the country. They concluded that it is a perfect time to prefer buying instead of paying rent to a house. 

Young people in Germany are fewer in buying their own house. Buying a house is beneficial for some individuals and families. As per the analysis, investing in renting and sharemarket against buying a home has a more significant investment value. People who want to invest and who have one eye on retirement, buying a house is the cheapest option only if they can afford it.

Chris Mulder (Mortage advisor) said that 'At a fundamental level, what you see in Germany is that the people who rent, they end up poorer than the people who buy.'

Less than 70 percent of Germany's population prefers renting instead of buying the home. Whereas in the United States of America, the United Kingdom, or Australia, they aim to get their property. 

Renting in Germany

Germany has various laws related to rent control. It prevents landlords from raising rental prices unilaterally. This is helpful for people who prefer renting. The lease period is long in Germany when compared to many other countries in the world. One advantage is that tenants can make significant adjustments to the property. But for landlords, they have to face more significant barriers in evicting tenants.

Renting versus buying in a financial sense

It mainly depends on people's personal circumstances as well as their short and long-term goals. 

If someone has planned to stay for a short term in Germany, they may not want to make a financial commitment, can prefer renting instead of buying a house as they do not have a large amount of savings. 

Among 401 urban districts in Germany, 112 district people consider buying the home is worth and cheaper. 

But, Mulder added the following statement.

Buying a house involves quite a few upfront costs. In Germany, these upfront costs are high. Real estate agent fees seem to be as high as 7.14 percent, notary fees (2 percent), and taxes on the purchase up to 6.5 percent. 

When compared to previous years, houses are affordable, and interest rates are also low. 

Renting is beneficial for people who do not have a deposit. But, it is for the short term. For people who want to live inexpensively for a long term can purchase a house of their own. On the whole, long-term financing is worth in Germany. 

For example, if you are staying in Cologne's western city, you have a financial advantage of 28.5 percent (in a term of 35 years) if you buy a house instead of renting it.