The crisis has made many people feel increasingly insecure. However, there is no universal right or wrong when it comes to whether buying or renting is the smarter choice. Rather, three factors are important to this decision.
The great real estate illusion
Until recently, anyone who dared to look at the real estate markets saw exorbitant price increases in almost every location in Germany. Due to rising prices and interest rates, buying property seems almost impossible.
In fact, they are just an illusion. Taking into account the sharp rise in incomes, it quickly becomes clear that from 1980 to today, real estate has become more expensive, adjusted for inflation, by about 15 percent. In this regard, the currently higher interest rate is irrelevant. In the end, purchasing power increased dramatically and money became increasingly worthless. In the days of the German mark, the construction of houses was possible mainly through self-effort and a combination of efforts. Often only a small part was financed and a large part was paid for with own capital.
“High interest rates make purchasing difficult”
For a long time, real estate was in extremely high demand due to the zero interest rate policy. However, as interest rates increase, the number of interested parties decreases. Buying a property is no longer as affordable as it was two or three years ago. For example, buyers should expect significantly higher loan fees.
Furthermore, it has become essential for them to differentiate between owner-occupied properties and rented properties: those who do not want to rent must bear the greater interest burden themselves. Today, only people with very high incomes or wealth can do this. For this group of people this also creates enormous opportunities in today's real estate market. After all, prices have fallen sharply. Additionally, additional financing remains an option for creditworthy buyers as soon as interest rates fall again. Therefore, purchasing property could be especially profitable at this time.
“Certain requirements must be met”
Whether it is worth renting or buying a property depends on the existing assets: for example, if someone has a lot of capital or a high income, the real estate market currently offers attractive opportunities. It may therefore make sense, especially now, to buy and get the money back later, for example through a loan.
However, the calculation between purchasing on credit and renting shows that, from a purely asset perspective, purchasing a property for personal use on a monthly basis is currently not more sensible, but rather more expensive.
However, if you buy and then rent the property, the tax office will refund most of the interest. Therefore, it is a good idea to rent a house yourself and buy another property to rent out. Depending on your income or available capital, this is currently the best option for building wealth.