It's just a fact. Many Germans can't be bothered to buy a house.
The
country's homeownership rate ranks among the lowest in the developed
world, and nearly dead last in Europe, though the Swiss rent even more.
Here are comparative data from 2004, the last time the OECD updated its
numbers. (Fresh comparisons are tough to find, as some countries only
publish homeownership rates every few years or so.)
And though those data are old, we know Germany's homeownership rate remains quite low. It was 43% in 2013.
This
may seem strange. Isn't home ownership a crucial cog to any healthy
economy? Well, as Germany shows—and Gershwin wrote—it ain't necessarily
so.
In Spain, around 80% of people live in
owner-occupied housing. But unemployment is nearly 27%, thanks to the
burst of a giant housing bubble.
Only 43% own their home in Germany, where unemployment is 5.2%.
Of
course, none of this actually explains why Germans tend to rent so
much. Turns out, Germany's rental-heavy real-estate market goes all the
way back to a bit of extremely unpleasant business in the late 1930s and
1940s.
By
the time of Germany's unconditional surrender in May 1945, 20% of
Germany's housing stock was rubble. Some 2.25 million homes were gone.
Another 2 million were damaged. A 1946 census showed an additional 5.5
million housing units were needed in what would ultimately become West
Germany.
Germany's housing wasn't the only
thing in tatters. The economy was a heap. Financing was nil and the
currency was virtually worthless. (People bartered.) If Germans were
going to have places to live, some sort of government program was the
only way to build them.
And don't forget,
the political situation in post-war Germany was still quite tense.
Leaders worried about a re-radicalization of the populace, perhaps even a
comeback for fascism. Communism loomed as an even larger threat, with
so much unemployment.
West Germany's first
housing minister — a former Wehrmacht man by the name of Eberhard
Wildermuth — once noted that "the number of communist voters in European
countries stands in inverse proportion to the number of housing units
per thousand inhabitants."
A housing program
would simultaneously put people back to work and reduce the stress of
the housing crunch. Because of such political worries — as well as
genuine, widespread need — West Germany designed its housing policy to
benefit as broad a chunk of the population as possible.
Soon
after West Germany was established in 1949, the government pushed
through its first housing law. The law was designed to boost
construction of houses which, "in terms of their fittings, size and rent
are intended and suitable for the broad population."
It
worked. Home-building boomed, thanks to a combination of direct
subsidies and generous tax exemptions available to public, non-profit
and private entities. West Germany chopped its housing shortage in half
by 1956. By 1962, the shortage was about 658,000. 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.
It's worth noting
that Germany wasn't the only country with a housing crisis after World
War II. Britain had similar issues. And its government also undertook
large-scale spending to promote housing. Yet the British didn't remain
renters. The UK homeownership rate is around 66%, much higher than
Germany's.
Why? The answer seems to be that Germans kept renting because, in Germany, rental housing is kind of nice....