The challenges faced by the German automotive industry are increasingly having a tangible effect on the housing market. This finding comes from a study conducted by the property financing intermediary Interhyp and the Institute of the German Economy (IW), which was reported by the “Handelsblatt.” However, this trend is not driven by a sharp rise in regional wealth, but rather by a weaker overall economic outlook, which is expected to curb demand for homeownership and moderate price increases.
Jörg Utecht, chief at Interhyp, states that the current less optimistic economic perspectives have likely acted as a brake on both demand and the progression of purchase prices. Consequently, in major industrial hubs such as Wolfsburg, Ingolstadt, Schweinfurt, and Stuttgart, prospective buyers are finding it easier to afford single-family homes.
Nationally, the study reveals a surprisingly stable picture regarding housing affordability. Despite rises in both prices and interest rates, the affordability index for single-family homes remains nearly at last year’s level, measuring 103 points. The report indicates that current higher mortgage rates and increased purchase costs are largely being offset by growing wages. Nevertheless, the affordability has declined within the past year in 251 out of 400 counties and independent cities examined.
The index is based on the ratio of a model household’s monthly loan payments to their net income. A score of 100 signifies the threshold for a home purchase to be considered affordable, with scores above this value indicating a lower financial burden and scores below it indicating a higher one.
According to the study, the situation is particularly strained in Germany’s seven largest cities: Hamburg, Berlin, Cologne, Düsseldorf, Frankfurt/Main, Stuttgart, and Munich. In these areas, the index only reaches 80 points, and 89 points in their surrounding regions. Outside these major urban centres, however, homeownership is significantly more affordable. Specifically, in large cities with over 100,000 inhabitants, the index is 105 points; this rises to 111 points in the surrounding areas, and 118 points in the remaining counties. Interhyp reports that roughly 45 percent of the model households analyzed live in regions where buying a single-family home is deemed affordable.
