Buying a house in Germany is an attractive option for many foreigners. Having come to Germany to work or study, it may be that you are considering buying a house here. It could be the case that Germany has become the centre of your family’s world, and now it is time to commit to settling down here. Maybe you are in your golden years and are seeking to retire to Germany (see our page “Retiree Residence Permit in Germany” to find out more). Whatever reason you may have, this page aims to provide you with the advice needed when it comes to buying a house in Germany.
If you require specialised advice on how to purchase property in Germany, please consider contacting our lawyers directly. We can be reached by phone, email or through our contact form. Our lawyers work with clients from all over the world and know the difficulties facing those looking to work with the German legal system and bureaucracy. Contact us today, and we can work together to achieve the best results for you!
The German Property Market
In comparison to other countries, the rate of house ownership in Germany is relatively low. Approximately half the population own their own homes in Germany. However, buying a house is now proving to be more popular, especially for foreign professionals living and working in Germany. Renting has an established history in Germany as in many cases, rent prices are pretty reasonable in Germany. Added to this, generally, strong rent controls prevent the costs from fluctuating too much over time.
Long term interest rates are forecasted to stay relatively low. German buyers tend to be risk-averse, and the properties they purchase are usually “properties for life“. This is one of the reasons why the rate of ownership is low compared to other countries of similar standing. With this in mind, the German market is now proving more attractive to outside purchasers. In contrast to traditional German buyers, foreign buyers tend to be more willing to “dive in” and make purchases. This should not be seen as a surprise, as the German market is relatively stable, but prices (especially in major cities) are rising in certain areas.
It should be noted that for older properties (especially in the Fachwerkhaus – timber-framed style), there may be rules in place regarding the alterations that an owner can make to their property. These can be limiting for the purchaser. There may also be regulations in place regarding environmental considerations. These types of concerns can complicate the process of purchasing a house in Germany. Working with experts in the field of German law may therefore be advantageous.
Differences in the Market within Germany
The German property market varies significantly according to where a person finds themselves looking. Big metropolitan cities such as Hamburg, Cologne, Frankfurt, and Berlin will be considerably more expensive than more rural areas. Therefore, when purchasing a property, bear in mind whether living in and around a metropolis is in your interest. If you are working in a city, living nearby is worth considering; however, if you plan to retire to Germany, looking outside of the cities may be better for you. With impressive motorways, an integrated public transport system and smaller towns which offer many amenities, smaller towns and villages in Germany may be exactly what you are looking for.
Even when dealing with the major cities, there are differences to consider. Compared to the other metropolitan areas, Munich is the most expensive of the big cities for buying and renting properties. In Munich, you can expect prices of over €7000 per square metre, whereas even in Berlin, it is possible to find similar-sized properties where that cost comes in at between €3000-4000 per sq. metre. Of course, for more central properties and those in great locations, buyers can expect to pay €10,000+ per sq. metre.
Frankfurt, Düsseldorf and Cologne are other cities in which the prices will be pretty high. Although not high as Munich, buyers can expect to pay more in these cities than they would for many properties in Berlin. In comparison, cities such as Bremen, Hannover and Dortmund are usually much more affordable. However, in the east of Germany, in the former GDR states, buyers can find houses and other properties at a more discounted rate. Even in big cities such as Dresden and Leipzig, it is possible to find properties for prices much lower than can be expected for properties in cities such as Munich.
Certain cities will have more opportunities than others. This is the case for jobs, schools, universities and public amenities. Such cities such as Munich, Berlin and Frankfurt are particularly suitable for investment properties. However, even in more affordable cities, the infrastructure in Germany is impressive. Most of Germany’s big cities can access major international airports, motorways between cities, and public transport networks.
Availing of advice from an advisor in Germany is, of course, to be recommended. Working with a professional will allow you to outline your requirements, your budget and your expectations. With your criteria outlined and working collaboratively, your dream of buying a house in Germany can be achieved.