Why buying instead of renting often makes more sense at the moment!

If you look at the home ownership rate alone, a sobering picture emerges: in no other EU country do so few people own their apartment or house as in Germany. According to statistics, the ownership rate in Germany is less than 50 percent, but in 2020, on average in the EU, almost 70 percent of the population lived in their own home. Why is that? And does this mean that everything has already been said when it comes to the question of “buying or renting a property”? Not at all. A variety of factors influence the decision in favor of buying instead of renting.

The consideration of whether it would make more sense to buy an apartment instead of renting it is of course largely influenced by the costs. The initial question is: With regard to individual life planning and age, is it justifiable to pay increasing rents and additional costs month after month if in the end you do not own a condominium or house and are therefore left empty-handed after many years of paying rent? So why not finance an apartment or house with a comparable cost?

This long-term perspective is definitely worthwhile. However, it requires a clear assessment of the personal situation, available financial resources and geographical ties. The decision between owning a property or owning a home and renting also depends on whether you are willing to remain loyal to a certain location in a city or region.

Advantages of buying a property


As the owner of a property, you are free to design and use it. You can furnish and remodel the apartment or house according to your own wishes.

Increase in valueG

Typically, property prices increase over time. This means that a property still represents a very good investment. The term “concrete gold”, especially in times of crisis, describes this situation quite well.

Tax benefits

As the owner of a property, you can take advantage of tax advantages under certain conditions, such as the home ownership allowance or tax relief for modernization measures.


As a tenant, you bear the risk of rent increases, terminations by the landlord or changes in living conditions. Furthermore, from a financial perspective, you are investing in something that will never be yours. In contrast, owning your own property offers long-term security and stability.

Other factors to consider when purchasing

Purchase price

The purchase price of a property is usually high. The amount of equity required to obtain a home loan in Germany depends on the purchase price, the creditworthiness of the borrower and the requirements of the banks. As a rule, experts recommend covering at least 20 to 30 percent of the total costs of purchasing the property with your own capital. The more equity is invested in building financing, the safer and cheaper it becomes. However, it is also possible to obtain building financing without equity if the borrower has good credit and a secure income.

extra costs

In addition to the purchase price, there are also other costs such as real estate transfer tax, broker commission, notary fees and land registry fees. These should be calculated carefully before making the decision to purchase a property. An independent financial advisor can be of great service here. An essential point of the additional costs (regardless of whether a house or an apartment is purchased as property) for one comprehensive protection of the property is home building insurance. Here, too, there are many aspects to consider and advice in advance is recommended.

Maintenance costs

Real estate needs regular maintenance. This includes repairs, renovations and maintenance work. They can make up a significant portion of the total cost of a property.

Renting: What’s in it?


Basically, as a renter you have a little more flexibility than would be possible with your own home. A move can take place at any time as soon as your life situation changes.

Cost-effective entry

The monthly rent is usually lower than the monthly loan payment. But this does not always have to be the case and depends on various factors, such as the purchase price of the property and the available equity capital. Depending on the property, it may happen that the monthly loan payment for purchasing a property is lower than the monthly rent.

No additional costs

Tenants don’t have to Additional costs such as property transfer taxbroker commission, notary costs and land registry fees.

Changing real estate decisions: Influence of rising rents, low mortgage interest rates and current interest rate developments

In recent years, the decision between renting and buying has been significantly influenced by rising rents and previously very low mortgage interest rates. In recent years, these factors have led to more and more people thinking about purchasing real estate when planning their retirement.

The still rising rents take up a significant portion of the household budget, which increases the consideration of investing in one’s own four walls and in building wealth by purchasing one’s own property. At the same time, however, it should be noted that the currently rising interest rates impact the financing of real estate and therefore introduce additional consideration into the decision-making process.

Interest rates for residential construction: Current situation in Germany

The average interest rate for housing loans to private households in Germany in 2022 was 3.89 percent on average with an initial fixed interest rate of over 10 years. However, it should be noted that the exact interest rates vary depending on the bank, term and creditworthiness of the borrower. It should also be mentioned that interest rates for home loans have fluctuated greatly in recent years and depend on various aspects, such as general interest rate developments, the economy and inflation.

Annual increase in the value of real estate in Germany

The annual increase in value of real estate varies depending on the location and is also linked to other factors:

  • demand
  • current interest rate situation
  • legal framework for granting loans
  • the economic development of the respective region

The average annual increase in the value of real estate in Germany has been around 6% in recent years. In 2023, the increase in value was still an impressive 5.2%. In large cities such as Munich, Frankfurt or Hamburg, prices are significantly higher than in rural areas. In some of these cities the increase in value is over 10% per year.

Real estate prices in Germany have risen in recent years. The House price index of the Federal Statistical Office was over 160 points at the end of 2022. However, it is important to note that the increase in value of a property is not guaranteed and can only reflect a value that can be calculated from previous years.

In a nutshell: Buying vs. renting – a current assessment

Deciding whether to buy or rent a property is a complex question that is subject to numerous conditions. Ultimately, however, it can be said that buying a property currently makes a lot of sense. Real estate prices in Germany have risen sharply in recent years, making the decision to buy more attractive for many people. However, the decision should also take into account the disadvantages of the purchase, such as: B. the additional purchase costs and maintenance costs are taken into account. It can be helpful to use different online calculators to compare the amount of rent and loan installments over the years.

Summary tips for the decision

When deciding whether to buy or rent, the following circumstances should be considered:

  • Personal life situation: How long do you want to live in the same place?
  • Financial situation: How much is the disposable income?
  • Willingness to take risks: How much risk are you willing to take?
  • It is advisable to consult one before making a decision independent financial advisor to be clarified.

Are you looking for the right real estate agent?

Regardless of whether you are selling or renting your property, use our free broker recommendation. For us, the quality of the broker is crucial for a recommendation.

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