Are you dreaming of moving to Germany? Well, we have good news for you: Foreigners can buy property in this European country. Continue reading this guide to learn about the German house-buying process.
Homeownership in Germany
When it comes to homeownership rates, Germany is among the countries in Europe with the lowest rate. Data from Statista shows that only 48% of Germans own houses. By comparison, the average homeownership rate in the European Union is 70%.
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In 2021, the German Federal Bank attributed the low homeownership rate to the high extra costs of purchasing houses.
Should You Rent or Buy a House in Germany?
Renting is a common option in Germany, with over 50% of Germany’s adult population choosing to rent than buy a house. Moreover, if it’s your first time in Germany, we recommend you consider renting so that you can have enough time to explore German real estate.
To rent an apartment or house in Germany, you will be required to present proof of identification, your income, and a credit report. If you have lived in Germany before, your new landlord will ask you to provide a certificate from your previous landlord showing you’ve cleared outstanding rent.
The minimum tenancy period in Germany is usually two years.
The German Real Estate Market
Property prices in Germany have soared in recent years. According to research conducted by the German Federal Statistics Office, prices have grown by 93% since 2012. Meanwhile, housing analysts at popular media house Reuters have predicted a 7% rise in 2024 and 3% in 2025.
It is worth mentioning that properties available for purchase in most German cities are apartments. Houses are common in suburban areas.
As of November 2023, the average house price in Germany is €3,800 per square meter.
Buying Property in Berlin
Buying a house in Berlin can be challenging, given the limited number of units available for sale. Since most residents in Berlin prefer renting, you are likely to find more rentals than houses for sale. House prices in this city are higher than the country’s average but relatively cheaper than those charged in cities like Frankfurt and Munich.
Buy Property in Munich
Purchasing a house in Munich is more expensive than in any other German city. Moreover, the cost of living here is high. EU Commission’s recent Costs of Living report ranked Munich as Europe’s 15th most expensive city.
Like Berlin, Munich hosts more rentals than houses for sale. However, you are likely to find a house in the suburban areas.
Financing a House in Germany
Foreigners and Germans are allowed to access mortgage options when buying houses. However, it is worth mentioning that banks require foreigners to make bigger deposits than Germans. Some of the financial institutions in Germany offering mortgages include Postbank, Hypovereinsbank, DKB, Commerzbank, and Deutsche Bank.
These banks usually grant mortgages to individuals earning a minimum of €20,000 annually. In addition, the loan repayments must not exceed 30% of your monthly earnings.
Finding a House in Germany
The best way to find a house in Germany is through real estate agents, who sell homes on behalf of owners. However, you can visit websites like Immowelt, Immonet, and Immobilenscout24 to find houses listed directly by homeowners.
The Process of Purchasing House in Germany
Follow these simple steps to buy a house in Germany
Make an Offer: It is advisable to make an offer with the assistance of a real estate agent based in Germany. After your offer is accepted, most homeowners will require you to pay a reservation fee of about 1% of the house price. The owner will then take the property off the market.
Apply for Mortgage – Provide the necessary documents to your preferred bank to secure a mortgage. It usually takes about ten days for your application to be processed.
Sign the contract – After the bank approves your mortgage, you can enter into a purchase agreement with the house seller. Remember to sign the contract under the guidance of a lawyer.
Transfer Funds and Receive Title Deed – The lawyer will submit a copy of the contract to a lands registration office, where a new title deed will be issued. After that, request the bank to transfer funds to the seller.
The homeowner will then give you the keys to your new German house. Now enjoy your life in Germany.