Germany stands out as the sole EU nation boasting more renters than homeowners. Last year, the ownership percentage dipped from 49% to 47%, according to Eurostat's data. Austria, following closely, recorded a descent from 54% to 51%.
Europe's overall ownership rate saw a minimal drop, with Eurostat reporting 69% ownership and 31% renting. The highest ownership percentages are recorded in eastern EU nations such as Romania (95%), Slovakia (93%), Croatia (91%), and Hungary (90%).
Beyond Austria, Germany's ownership rate equals or surpasses the lowest levels in Denmark (60%) and France (63%). Even Switzerland, cited as an exception outside the EU, boasts a lower ownership rate (42%). However, Luxembourg, part of the EU, stands out with a higher ownership rate of 62%, making it unique in the EU context.
Italian (71%), Spanish (71%), and Dutch (67%) homeownership rates exceed Germany's tenant-dominant housing market. This situation was highlighted in a recent Eurostat report, underscoring similar trends in Austria, where the ownership rate decreased from 54% to 51%.
Various factors contribute to Germany's distinctive tenant-oriented housing market within the EU:
- Cultural Preference for Renting: Germany's strong cultural inclination towards renting, with an exceptional percentage of rental properties, is among the highest in the EU.
- Regulatory Framework: An accommodating regulatory framework supporting tenant rights is characterized by long-term rental contracts with tenure periods averaging 11 years, lending increased security to tenants.
- Taxation Factors: Higher transfer taxes (3.5% to 6.5%) and the absence of mortgage interest tax deductions have made homeownership more expensive and less appealing for many Germans.
- Affordable Rents: Relatively affordable rents in Germany, with an average rent-to-income ratio of approximately 25%, compare more favorably to London and Paris.
- Supply and Construction Costs: Limited supply and substantial construction costs have exacerbated the housing market's supply-demand imbalance, leading to vacancy rates remaining below 1% in major markets.
- Government Policies and Regulations: The rent-brake law (Mietpreisbremse) capped rent increases and aimed to maintain housing affordability for tenants while ensuring a stable rent profile for long-term institutional investors.
- Historical Precedent of Renting: Germany's long-standing tradition of renting has significantly influenced the market's strong rental sector and tenant-friendly policies.
