Germany, the rich nation that does not encourage people to own homes

Apartments in Germany. Home ownership rates are unusually low in the rich country.

Conventional wisdom has it that home ownership is crucial to a stable economy. But not in Germany. According to Quartz (, Germany’s home ownership rate remains quite low. “It was 43 per cent in 2013.” Compare this to Spain’s 80 per cent.

World War II left Germany’s housing and the economy in tatters. A government housing programme sought to “boost construction of houses which, ‘in terms of their fittings, size and rent are intended and suitable for the broad population.’”

According to the report, the vast majority of new housing units were rentals. “Why? Because there was little demand from potential buyers. The German mortgage market was incredibly weak and banks required borrowers to plunk down large down payments. Few Germans had enough money.”

Quartz writes that there might be a simpler explanation for the popularity of renting in Germany. “For one thing, it’s relatively cheap… Even though the country’s policies might have been slightly more balanced than in other countries, its rental market is still robustly regulated, and the regulations are quite favourable to renters… German law allows state governments to cap rent increases at no more than 15 per cent over a three-year period.”

And then there’s another simple reason Germans are less likely to own houses, according to the report: “The government doesn’t encourage it. Unlike high-home ownership countries like Spain, Ireland and the US, Germany doesn’t let homeowners deduct mortgage-interest payments from their taxes.” What do the people think? Quartz reports: “More than 93 per cent of German respondents tell pollsters they’re satisfied with their current housing situation. That’s one of the highest rates of any nation the rich-country think-tank surveyed.”


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