For homeowners and property owners, a rising real estate market is reassuring: The residential unit looks better again on their personal balance sheet and no longer keeps losing value on paper. After the interest-rate turn and the falling prices of recent years, that is certainly a relief.
For everyone who still wants to buy, however, it is bitter. They do not own a corresponding asset that is recovering, and they face a price that is rising again and therefore making home ownership more expensive again. On top of that come interest rates, purchase ancillary costs, pressure to provide equity, renovation obligations and a state that in many places slows ownership down rather than making it easier.
And that is exactly where the contradiction lies: Germany has been talking about affordable housing for years, but treats wealth-building through ownership like a luxury problem. Anyone who wants to buy first has to pay an entrance fee. Anyone who wants to build ends up in regulations and permits, and anyone who wants to rent out property gets regulation and political uncertainty delivered with it. Afterwards, politicians wonder why too little housing is being created.
Rising prices do not help everyone
Real estate prices always have two faces: Anyone who already owns a property feels better when prices rise. The house appears more valuable, the apartment sits more securely on the personal balance sheet, the financing looks less strained, at least on paper.
For tenants who want to buy, exactly the opposite happens: A higher purchase price means not only a larger loan. It also pulls ancillary costs upward. Real estate transfer tax, notary, land register and often broker fees depend directly or indirectly on the purchase price. 50,000 euros more is therefore often 50,000 euros more debt.
This creates a wealth gap or, put differently: The gap between rich and poor keeps widening. Anyone who already owns property holds an asset that can rise with the market. Anyone who does not yet own one has to catch up with this development from current income, savings and borrowing capacity.
Income then has to be earned again every month, taxed and defended against rising costs. Ownership, on the other hand, can run in the background, store value, erode debt, replace rent and bundle wealth over decades. Anyone who cannot build ownership remains longer on the wrong side of the equation.
The zero-interest world is not simply coming back
Many real estate conversations still sound as if the zero-interest phase had only disappeared briefly. But by now it is very far away. In the past, high purchase prices could be covered up by very low interest rates. A property for 500,000 euros was expensive, but at 1% interest it was still manageable for some households. The monthly payment looked bearable even though the price had long been high.
Today the same calculation is harsher. A somewhat lower purchase price helps little when the interest rate is significantly higher. Buyers do not pay the real estate index. Every month they pay interest, repayment, ancillary costs, reserves, insurance, property tax and eventually the next repair. A house is not a simple portfolio item that quietly lies around after purchase. It needs a roof, heating, windows, electrical systems, insulation and sometimes everything at the most inconvenient time. With older buildings, one larger renovation is enough, and a tight financing plan becomes a problem sitting at the kitchen table every month.
Rising prices in a higher-interest world are therefore not a good signal for buyers. They mean more credit, more equity, more ancillary costs and less room for error. Anyone who calculates too tightly is not buying freedom. He is buying a burden that is more punctual than any salary.
Ancillary costs are the first blow
Germany makes ownership expensive even before the first euro of repayment. Depending on the federal state, real estate transfer tax is up to 6.5%. Then come notary, land register and often broker fees. In a normal purchase, tens of thousands of euros can quickly be gone before even a single euro can flow into the property itself.
This money does not build a bathroom, repair a roof or lower the monthly payment. It creates no housing that could ease the rental market in these times. The high hurdles are, in a sense, the entrance fee to the real estate market. For the state, that is convenient. For buyers, it is often the hurdle where the dream of ownership ends before it has even begun. Young families, average earners and households without an inheritance are hit especially hard. They do not necessarily fail because of the monthly payment, but because they have to raise ancillary costs, equity requirements and a safety reserve at the same time. Anyone who needs 40,000 or 50,000 euros just to get started saves for a long time before they can even talk about moving, furniture or renovation.
Politically, that is hard to bear. Private provision is constantly invoked, while at the same time the state takes a hefty cut precisely on the path into one of the most important wealth-building blocks. Anyone who wants to make ownership possible more broadly would have to make entry easier. Germany makes it expensive.
Building does not fail only because of material prices
In new construction, the problem becomes especially visible: Supply is scarce, demand is huge. Germany simply needs more apartments. At the same time, the country makes building slow, expensive and nerve-racking. Permits take time, responsibilities are fragmented, requirements grow, standards change, and in the end every additional tick in the procedure costs money.
Of course building needs rules. Nobody wants unsafe buildings, poor fire protection or botched structural and energy work. But at some point the sum decides. Energy requirements, parking-space rules, noise protection, fire protection, municipal requirements, documentation, paperwork obligations and long procedures then no longer add up to a sensible protection system, but to a bureaucratic cost machine that automatically ends up in the purchase price or rent. Precisely this point is often overlooked politically. Anyone who makes building more expensive and slower cannot then credibly complain about affordable housing.
Large project developers can bear bureaucracy more easily. They have legal departments, financing partners and experience with authorities. Private builders, small landlords and medium-sized investors, by contrast, think three times about whether they want to put themselves through it. If they drop out, the market does not become more social. It becomes smaller and therefore more concentrated.
Rent control manages scarcity
The rent brake sounds like protection for those who supposedly cannot afford to acquire home ownership. Of course, rising rents are a real problem for many households. Anyone who transfers a large part of their income to the landlord every month needs a home that remains affordable in order to manage their cost of living reasonably well.
But affordable housing is not created by a politically fixed number in the rental contract. If too few apartments exist in sought-after places, scarcity remains. A capped price builds no new apartment, accelerates no permit and makes no plot of land cheaper. This intervention hides the signaling effect of prices and destroys the market over the long term. For private landlords, all of this becomes less attractive. Anyone who rents out a single apartment bears this risk differently than a large portfolio owner. Some invest less. Some sell, and others avoid additional properties altogether.
Anyone who limits rents without creating supply distributes scarcity. The queue gets longer, the selection smaller, the competition harder. In the end, those who are already inside often benefit. Anyone newly searching finds even less.
Buying is important, but not a free pass
Despite all criticism of the hurdles: Buying is not automatically better than renting. An overpriced purchase with tight financing is not a wealth plan, but a real concentration risk without much diversification. Anyone who has no reserves left after the notary appointment owns a property, but hardly any room to move. In the truest sense of the word, he has tied a huge concrete block to his leg. A house always ties up capital, time and location. It concentrates wealth in one object, one location and one financing structure. If income, property and everyday life all depend on the same region, a concentration risk emerges that is often played down. On top of that come repairs, modernization and political requirements.
Nevertheless, ownership remains a central building block of wealth. Not because every property automatically makes people rich, but because ownership has a different long-term effect than consumption. Anyone who repays debt builds equity. Anyone who lives debt-free reduces ongoing costs in old age. Anyone who rents out property can earn income from assets.
Renting, by contrast, can make sense if the purchase price does not fit one’s own financial structure. Then wealth building must take place somewhere else: through stocks, equity stakes, retirement provision or other productive assets. Renting permanently while building nothing alongside it is not a good decision. One always remains dependent: whether on earned income, the rental market or simply the state.
The state slows things down and then wonders why
German housing policy follows an old pattern: It fights visible symptoms while simultaneously worsening the causes. High rents are regulated and high purchase prices are lamented. New construction is promised, while purchase ancillary costs remain high, procedures slow, rules complicated and investments politically uncertain. The state takes money at purchase, slows down renting, complicates building and then wonders about scarcity and the population’s justified resistance. Much of this is justified in social terms. In practice, it always hits the middle: families, young buyers, small landlords, average earners and people without an inheritance.
A true ownership society does not arise this way. Not through rent controls, subsidy programs with complicated conditions or new political promises. It arises when more is built, when entry costs fall, when permits move faster and when ownership is not constantly treated as if it were a problem that must be managed with suspicion.
Germany does not need even more friction in the housing market. It needs more supply and lower hurdles for people who want to take responsibility, buy, build, renovate or rent out property!
