to buy or not to buy
Whilst an Englishman’s home is undeniably his castle, the same cannot be said of Pierre’s chateau or a Klaus’s fortress. We in the UK remain unique in our love of bricks and mortar, see it as a moral obligation to own our home and never feel better than when we’re busy exporting our house price inflation. But why?
Irrespective of the chancellor’s budget tinkering, first-time buyers in Britain are struggling. House prices remain mind-boggling and pocket-emptying high. Mortgages are nigh-on impossible to come by. Deposits up to 30% are the rule as opposed to the exception. Many are now renting long into their mid-30s but survey after survey reveals that our desire to own remains the ultimate goal for the British family. And get this, we all understandably pull our collective faces about the price rises in food, fuel, utilities, beer and fags but what’s the one price we love to see rise and dread to see fall? Yep, our house price. Go figure. The only reason is that we believe a high level of equity build up will be released in later life and provide for our pension.
The main reason the Germans aren’t as obsessed with home ownership as we are is that it has been many years since Germany experienced a house price bubble. Unlike most of the rest of Europe it has not ‘enjoyed’ a housing boom during the past decade. In fact, real house prices have fallen since the early 90s and this has resulted in rents remaining up to 50% less than the associated purchase and mortgage costs. And 50% less than comparable rents with the UK. With long-term falling (or stable) house prices, it is unsurprising that there hasn’t been a rush towards owner-occupation.
But, not to worry. Apparently the savvy property developer has realised there’s profit to be had in Berlin, Munich, Stuttgart, Hamburg and Dresden and we’re moving in en-masse. House price inflation in these attractive cities is now running at 4-5%. How the locals must love us!
