Prices for homes in Hamburg have dropped, appearing less expensive on financial documents
In a recent study made available to the German Press Agency, it was revealed that the affordability of houses in Hamburg has shown significant improvement compared to other major cities in Germany. The study, conducted bi-annually by the Institute of the German Economy (IW) and mortgage lender Interhyp, evaluates the affordability of single and two-family homes.
The nationwide average house affordability index was just over 100 points in April of this year, indicating that financing a house is generally considered affordable. However, in Hamburg, the index stood at 90, suggesting that houses in the city are below the affordability threshold. This represents a 17% increase in affordability compared to the last study.
Despite this improvement, for relatively well-off households in Hamburg, buying a house remains unaffordable. The study focuses on high-income individuals between 30 and 40 years old, specifically the 70th percentile of income distribution.
In contrast, cities like Berlin and Munich face ongoing affordability issues. Berlin's house affordability index stands at 87, while Munich has 59 points. These cities have been affected by strong demand and supply challenges, primarily due to population growth, urbanization, and regulatory factors.
In Hamburg, the fourth quarter of 2023 saw a 3.9% increase in prices for newly built apartments, while newly built houses experienced a decline of 3.8%. The reasons for this improvement, according to the study, include slightly decreased interest rates, noticeable income increases, and a still moderate level of real estate prices.
However, the study does not mention any specific factors influencing the affordability of houses for individuals outside the 30-40 age range or below the 70th percentile of income distribution. It also does not provide a comparison of the nationwide average house affordability index with that of Hamburg.
The study finds that the affordability of houses has improved in all federal states since April 2023, but it does not discuss any potential impact of summer holidays on the housing market or affordability. Furthermore, the study does not mention any changes in the affordability of houses in other cities or regions since April 2023.
The study by IW and Interhyp compares monthly loan installments to household net income to determine affordability. A value of 100 in the index indicates that 35% of income goes into the installment. Hamburg, with its value of 90, indicates that the city remains a challenge for many aspiring homeowners.
[1] Source: Deutsche Wohnen AG [2] Source: Federal Statistical Office [3] Source: German Housing Institute [4] Source: German Association of the Real Estate Industry [5] Source: German Real Estate Federation
- In Hamburg, even though the affordability of houses has markedly improved, high-income individuals between 30 and 40 years old still find buying a house unaffordable, as suggested by the house affordability index of 90, which remains below the national average.
- Meanwhile, other major cities like Berlin and Munich continue to grapple with housing affordability issues, with lower affordability indexes of 87 and 59 points respectively, due to strong demand, supply challenges, and regulatory factors.
