Lability index: real estate in metropolises and barely affordable on the edge of the Alps

Despite the sunken property prices and increased income, your own house remains hardly affordable for most residents of the seven largest German cities and their surrounding area. The Upper Bavarian Alpine edge is also extremely expensive. On the other hand, one and two -family houses are affordable in smaller major cities and many rural areas – at least for the income group, which is typically interested in buying property.

This is the result of the Institute of the German Economy in Cologne and the credit broker Interhyp in a new “affordability index”, which measures the affordability of residential property based on the relationship between local real estate prices and the respective income. However, houses are currently more affordable than 2023.

Holzminden Top, Tegernsee for non-millionaires flop

The most affordable municipality in Germany is therefore the woodminds in the southernmost Lower Saxony. According to the IW Cologne, the home is the least affordable on the edge of the Alps in the Upper Bavarian district of Miesbach. The explanation: The latter is the Tegernsee, on the banks of which ex-FC Bayern President Uli Hoeneß and several other millionaires have settled.

According to a usual formula, a property is considered affordable or affordable if buyers have to spend a maximum of 35 percent of their monthly net income for financing. For this 35 percent threshold, the real estate experts from IW Cologne have set the index value a hundred. However, this does not refer to average salaries, but according to IW Cologne to the upper edge of the middle income group. In expensive Munich, for example, this corresponds to an income of 80,000 euros, according to IW real estate specialist Michael Voigtländer.

Seven metropolises all also difficult for better earners

Index values under 100 mean that buyers have to spend more than 35 percent of their net income to repay their loan. The higher the value over 100, the more affordable are residential properties in the respective municipality. The basis of the calculations was the regional income data of the employment agency and the prices of the real estate conveyed by Interhyp.

The most affordable federal state is therefore the Saarland with an index value of 151, the most unaffordable Bavaria with 84 points, followed by Berlin (87). Holzminden is located in the ranking of the affordable municipalities with an index value of 174 at the top, Miesbach is at the bottom with 52 points. All under the affordability threshold are therefore the seven largest German cities with index values of 59 for Munich to 90 in Hamburg. Since the new housing in Germany is still on the ground, the situation in Voigtländer will not improve: “This will tend to lead to the prices rise further.” The economist expects annual increases of both purchase prices and rents of around three to five percent. Voigtländer called for a “broad new building funding” to defuse the situation.

Smaller big cities much cheaper

In smaller cities, it currently looks much cheaper for real estate interested parties, at the top are Wolfsburg, Saarbrücken, Bremerhaven, Magdeburg and Bremen.

According to IW Köln, the German -wide cut is currently exactly 100 points. In the backward calculation, the index is higher – more affordable – than two years ago, but significantly lower than in 2015. Since the real estate prices have now left its low point in many places, according to interhyp director Jörg Utecht, since real estate prices have now also decreased. “The only thing that helps is building,” said Interhyp CEO Utecht.