Guide to buying German property

Guide to buying German property

Germany is one of the most popular countries in Europe for foreign-born residents to move to and for global business people to invest in, due to its strong economy and stable property market.

If you’re interested in moving to Germany, you can look forward to excellent employment, education, and healthcare, plus beautiful landscapes and a rich historical culture.

Several German cities are international financial hubs offering a variety of careers, while stately towns and rural villages offer the tranquillity of the German countryside just a short drive or train ride away from the nearest metropolis.

Though Germans have historically favoured renting over home ownership, investing in German real estate is becoming more popular for expatriates.

There are plenty of opportunities to purchase property in different areas of Germany, but it might be a bit daunting if you’re new to the idea.

Here’s a quick guide to buying property in Germany, from location and finance to living costs and quality of life.

Overview of the German real estate market

Despite the popularity of long-term rentals, in recent years low interest rates have led to a rise in people buying property in Germany.

There’s a high demand for residential property in Germany, driving higher prices in the most popular German cities:

• Berlin

• Düsseldorf

• Dresden

• Leipzig

• Frankfurt

• Hamburg

• Cologne

• Munich

• Stuttgart

As the capital city, Berlin tends to attract the most foreigners, but Munich, Frankfurt, and Hamburg are often considered secondary capitals due to their unique living and working opportunities.

It’s worth looking beyond the ‘big 9’ cities too, as there are plenty of attractive areas with lower property prices scattered throughout the 16 states of Germany.

When it comes to real estate investment, Germany’s consistently stable market throughout global crises makes it a safe bet for overseas investors.

With the country’s ever-strengthening national infrastructure and rising demand for homes, now is the best time to secure a house or apartment in Germany.

German property prices

It’s difficult to measure an average house price in Germany, because prices can change drastically depending on the property type and location.

Like in most countries, properties cost more in urban areas than rural ones, with major cities having higher property prices than others.

According to Expatrio, the average cost of German property is about €3,386 per square metre, compared to €5,844 for properties in Berlin and €9,938 for properties in Munich.

Munich is currently the most expensive German city to buy property in, followed by other big 7 cities like Frankfurt and Cologne.

Berlin is one of the cheapest of the big 7 German cities.

Cheapest cities in Germany

If you’re looking for the cheapest state to buy a home in Germany, it’s best to keep in mind that properties are generally cheaper to the north and east and more expensive to the south and west.

According to Numbeo, these are some of the cities with the average cheapest property prices in Germany (per square metre):        

• Osnabruck - €2,107.75

• Saarbrucken - €2,358.34

• Jena - €2,900

• Leipzig - €2,991.67     

• Dortmund - €3,008.34

• Bremen - €3,175

• Aachen - €3,375

• Mannheim - €3,373.75

• Dresden - €3,425

• Karlsruhe - €3,794.72

The lower the cost of property in the area, the lower the cost of living is likely to be, and vice versa.

That said, it’s possible to find affordable properties in one of the more expensive cities if you know where to look and the timing is right.

Buying a house in Germany

All you need to buy property in Germany is a valid passport as proof of your identity and the appropriate financing.

You don’t have to live in Germany to buy property there, so you can rent it out while living in another country.

While you don’t need to be a German resident to buy property, purchasing a home in Germany doesn’t automatically get you a visa, permanent residency, or citizenship.

If you intend to move to Germany to live there, you’ll have to apply for a residence permit separately and register at the local office within 14 days of your arrival in Germany.

Finding and buying property is a similar process in Germany to most European countries:

• Look for properties within your budget

•  Choose the property you want to buy

• Make an offer to the seller

• Get a notary to draw up the contract

• Sign the contract and get the notary to register it

• Pay any additional fees relating to the sale

We’ll go into a bit more detail about the financing process below.

Property tax and additional fees

There are some additional payments you should be aware of that come with closing a property purchase in Germany.

This includes a notary fee, interpreter fee (if needed), real estate agent fee, property sale tax, and setting up home insurance.

When it comes to property tax, Germany has a property transfer tax (Grunderwerbsteuer) rate of 3.5-6.5%, which must be paid within a month of the sale.

If you’re investing in a German property to let it out, you’ll also need to pay income tax on any rental earnings in Germany.

Now you know all about the process of buying a property in Germany, you can find out more about what it’s like to actually live there.

Cost of living in Germany

Germany is popular among foreign students, families, and retirees because of its high-quality education and career opportunities and a generally excellent standard of living.

It’s one of the safest countries in the world, with Germany placing 16th on the Global Peace Index, while the United Kingdom ranks at 42.

The climate isn’t too different from the UK with four distinct seasons, though the summers will be warmer in the south of Germany and winters colder in the north and east.

In exchange for colder winters, you’ll find more opportunities for skiing and snow sports in areas with mountains.

Germany is generally a peaceful country, with better pay for fewer working hours, more annual public holidays, and legal ‘quiet hours’ to make sure everyone gets their rest.

It’s relatively cheap to live in Germany compared to English-speaking countries like the UK.

Shopping around for utility, internet, and phone service providers is a similar process, but the end result is likely to cost less.

There’s also a mandatory fee for public service television broadcasting in Germany (Rundfunkbeitrag) which is around €18 a month, similar to the BBC licensing fee in the UK.

Grocery shopping in Germany is generally quite cheap, with plenty of discount supermarkets including Lidl and Aldi, plus farmer’s markets for fresh meat and vegetables.

There are also familiar European chains for affordable clothing and shoes.

When it comes to socialising, Germany offers a range of unique entertainment opportunities from art and cinema to food and drink.

Aside from standard living costs, you’ll need to know a bit more about earning a living and contributing to society in Germany.

Money and taxes in Germany

One of the first issues you might experience when moving to Germany is transfer fees for moving money from your home country into your German bank account. We can help you with this in various ways including introducing you to our Foreign Exchange Partner, Smart Currency Exchange .

Germany has an incremental tax system like the UK, so the tax rate gets higher the more you earn.

According to Expatica, these are the German income tax rates for 2021:

Earnings

Tax Rate

Up to €9,744

0%

€9,745 - €57,918

14-42%

€57,919 - €274,612

42%

€274,613 and above

45%

Previously, all taxpayers also had to pay a 5.5% ‘solidarity tax’ (Solidaritätzuschlag), but from 2021 only those earning €61,700 a year or more will have to pay this.

If you’re a registered member of a church, you’ll also have to pay an 8-9% ‘church tax’ (Kirchensteuer), but you don’t have to mention religious affiliations on tax documents.

All taxes plus pension, unemployment, and health insurance contributions will be deducted from your salary before it’s paid to you.

If you’re a UK national moving to Germany, double taxation regulations prevent you from having to pay tax in both countries for the same income.

Paying contributions into the German social security system (Sozialversicherungssystem) should entitle you to claim benefits in Germany if you ever need to.

Working in Germany

From science to finance, from media to manual labour, there are many opportunities in Germany for skilled workers.

Some companies have English as their primary language, so you don’t even have to be fluent in speaking and writing German to find a job.

According to the Organisation for Economic Co-operation and Development, Germany has the 6th highest employment rate out of 40 ranked countries.

Germany also has higher wages and fewer working hours than the UK, ranking 11th on the OECD’s chart of countries with the highest average wages and 3rd for the fewest hours worked.

This means it should be relatively easy to find productive employment in Germany with competitive wages, allowing you to live comfortably.

Of course, there are likely to be more job opportunities in bigger cities, but it’s possible to buy property in quieter areas to take advantage of lower costs and commute to a nearby city for work.

If you already have professional qualifications from your home country before moving to Germany, you can apply for recognition of your certifications in Germany so you can continue to work in your chosen industry.

Education in Germany

There’s a robust education system in Germany, with schooling being mandatory from ages 6 to 15, though most students stay in school until 18.

Before they start school, kindergarten or nursery is optional for children aged 3-6.

Some German public schools will teach exclusively in German, especially in rural areas, so if you have children who don’t speak German well it’s better to send them to an international school that teaches in English.

Higher education is free at public universities in Germany, even for non-German nationals, so it’s easier to pursue a degree than in countries with high tuition fees.

However, students do have to pay a ‘semester fee’ (Semesterbeitrag) of around €250-400 per semester, which covers the costs of using university facilities and public transport tickets.

Overall, Germany has a better than average educational system, ranking in the top 20 for reading, maths, and science out of 79 countries assessed by the OCED.

Healthcare in Germany

Germany has one of the oldest healthcare systems in the world, dating back to the 1880s.

It’s mandatory to have health insurance in Germany, whether you’re a permanent resident or not.

You must choose a healthcare insurer (Krankenkasse) and register with them through your employer, so they can contribute to your payments and deduct your own payments from your salary.

Your employer will pay around half of your contributions for you, but you’ll have to pay them in full yourself if you’re self-employed.

State health insurance is cheaper than private health insurance, but costs depend on your age and income.

According to the OECD, Germany is in the top 4 countries for high quality health services and ranks 5th for extent of healthcare coverage.

The accessibility of healthcare and relatively low costs have earned the German healthcare system a positive reputation internationally.

Transport in Germany

If you plan on driving in Germany, you’ll need to swap your UK driving licence for a German licence within 6 months – and remember to drive on the right.

You’ll also have to register your vehicle within 12 months if you bring it with you from your home country to Germany instead of buying a vehicle there.

You should brush up on German driving laws in advance, too.

It’s encouraged to use public transport in Germany, as there’s a good network of trams, buses, and trains with a variety of travel passes available.

It’s no surprise that Germany’s transport systems are so well-developed and connected, as Germany comes in 3rd out of 40 countries for highest investment in transport infrastructure.

Dedicated cycling lanes also make bikes an attractive option for city dwellers who want to help reduce air pollution.

Germany is highly invested in sustainability, with leading environmental policies for renewable energy and conservation, making it an ideal country to call home for the environmentally aware.

Get expert help with buying property in Germany

So there you have it – everything you can expect from buying a property and living in Germany.

If you still have questions about finding a property in Germany, our team of bilingual experts based in Dresden and Leipzig are here to help.

With our 35 years of experience, we can guide you through locating and buying German properties whether you’re an international investor or a family looking to start a new life in the heart of Europe.

Contact German Houses today to take the first step towards property ownership in Germany. 

Is Germany still a good place for property investment?

Real estate is a timeless investment with opportunities for growing income, but some places are more secure than others for making a profit.

Germany is considered a safe haven for investors because of its stable economy and the ongoing boom in its housing market.

It’s not only the economic powerhouse of Europe, but the fourth largest economy in the world.

The low risk and high demand means there’s plenty of opportunity for resale or buy-to-let, with more spending power in Germany than in the UK.

Find out more about property investment in Germany below.

The state of the German property market in 2021

Germany is still one of the best countries to buy property because of its resilient economy, with greater demand than properties available.

While the average property price in Europe fell in the five years following the global financial crisis in 2008, it rose by 12% in Germany.

When investments in the EU faced uncertainty after the Brexit referendum in 2016, Germany’s property market continued to attract investors and even overtook the UK’s property market for the first time in a decade.

And as global economies struggle with the effects of the COVID-19 pandemic, Germany remains relatively stable, causing the capital city of Berlin to top the rankings of prospective cities for property investors in 2021.

Germany consistently bucks the trend and remains a stable choice for property investment.

Plus, low interest rates and high quality of life continue to attract buyers and renters to Germany, with the increased demand for homes driving up prices in urban areas.

Even during the pandemic-induced recession in 2020, the average price of residential properties in Germany increased by 11.42%.

The current average cost of a property in a German city is around €5,000 per square metre with a rental yield of 2.9-3.7%, according to the Global Property Guide.

With the German property market and demand for housing continuing to grow, now is the best time to get ahead and invest in residential properties in Germany.

Best cities to buy investment property in Germany

European real estate investors are ranking Berlin as the best prospect for 2021, making the capital the most popular city for property investment in Germany.

The same survey also ranked three other German cities in the top ten, with Frankfurt in fourth place, Hamburg in sixth, and Munich in seventh.

These plus the rest of the ‘Big 7’ German cities (Dusseldorf, Cologne, and Stuttgart) remain popular choices for investors.

However, the demand far outstripping the supply of properties in the major cities is pushing prices up and turning investors and consumers alike towards ‘B cities’ as well.

Among these second cities, up-and-coming investment hotspots in Germany include Dresden and Leipzig.

City

Population

Reasons to invest

Berlin

4 million

Large investments in culture, education, and technology

Munich

1.5 million

Capital of richest state Bavaria, best quality of life

Frankfurt

0.75 million

European financial hub, beside the river Main

Dusseldorf

0.64 million

Second-largest banking city after Frankfurt

Cologne

1 million

Very diverse, creative media hub

Hamburg

1.8 million

Trade capital with the largest harbour in Germany

Stuttgart

0.64 million

A centre of innovation where many successful companies are based

Dresden

0.56 million

Rich in research and tech, huge industries for microelectronics and handcrafts

Leipzig

0.6 million

European City of the Year 2019, fast development

If you’re interested in buying property in Germany, we can help you find the ideal property to get you the best returns on your investment.

Contact German Houses today and our German-based bilingual agents can assist you with your property investment journey.

Is it expensive to live in Germany?

Germany cost of living: How much does it cost to live in Germany?

Despite being by far the biggest economy in Europe and the fourth biggest economy in the world, with a skilled, educated and diverse workforce, Germany remains a relatively affordable place to live compared to other Western European countries.

According to the Organisation for Economic Co-operation and Development (OECD) Germany performs above average in many areas of well-being relative to other countries in its Better Life Index.

In particular it ranks above average in education, skills, work-life balance, jobs and earning, income and wealth, environmental qualities, social connections and health status.

It also ranks highly in civic engagement, housing, personal security and wellbeing.

Germany also has a higher than average national disposable income level ($34,297 compared to the OECD average of $33,604).

Obviously your own personal cost of living is dependent on where in Germany you live, as well as your personal lifestyle, but overall, Germany is considered affordable for most people whether you’re a professional looking to move alone or with a young family, or if you’re considering Germany as a retirement destination.

Cost of property in Germany

The cost of property in Germany depends a lot on where in the country you’re looking to buy, and some areas can be considerably more expensive than others - particularly if you’re looking for property in a city.

However, compared to other comparable countries, Germany has some of the more affordable house prices.

For example, according to the Global Property Guide the average square metre price of property in Germany is €5,907.

That’s significantly less than the UK €21,179 as well as EU countries like France (€12,796) and Italy (€6,589).

The German housing market has also remained strong over the past decade. According to Bundesbank, house prices in Germany rose at an average rate of 4% a year until 2015 before increasing to nearly 8%.

Even during the COVID-19 pandemic house prices have remained stable.

So if you’re looking for a longer term investment, Germany is a reliable market to be involved in.

In terms of where to buy property in Germany, Munich is typically the most expensive area to buy with square metre prices of around (€6,300).

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Looking to buy rental property?

If you’re looking to buy a rental property, you can expect rents of more than €2,250 for a typical apartment in Munich, down to around €1,500 in Berlin.

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Utility prices in Germany

Utility prices in Germany have stayed relatively stable in the past decade. On average Germans pay about €30 per kWh, according to Statista.

While overall, Germany is one of the more expensive countries for consumer electricity, there are subsidies available that make it more affordable.

Typically speaking you would expect to pay between €143 and €353 a month on utilities (electricity, heating, air conditioning, water and waste disposal).

For a fast, reliable WiFi connection you’d expect to pay between €25 and €49 depending on your chosen provider.

Public transport costs in Germany

The average cost for a monthly season ticket on German public transport is around €78, with slightly higher prices in Berlin (€81).

Hamburg has one of the highest monthly public transport costs at about €100 a month while Munich is about €55.

In terms of reliability, Germany has a range of public transport options for short-travel around a city, or longer journeys out into the suburbs.

These include rail services, buses and tram networks similar to those found in other major European cities.

As with any public transport, actual prices will vary depending on the nature of the individual journey.

Costs for healthcare in Germany

Germany has one of the best quality healthcare systems in the world based on a dual public and private system.

This is split between the public health insurance system and the private health insurance network. It’s a legal requirement to have some kind of health coverage so you’ll need to choose one option.

If you’re planning to work after buying a property in Germany, your employer will usually register you with a health insurance company or they’ll need proof of your insurance information if you’re planning to choose your own plan.

Currently the health insurance contribution rate is about 15% contribution from wages, which is split between an employer and an employee.

How much tax will you pay?

Germany operates a progressive tax system so what you pay is determined by what you earn.

In 2020, incomes from around €9,000 to €57,051 were taxed at rates between 14% and 42%. An income of €270,500 was also taxed at 42% with a higher rate of 45% for incomes over €270,500.

There is also a “solidarity charge” which is paid to cover the costs of integrating the states of the old East Germany. However, from this year 90% of taxpayers are expected to be removed from paying this surcharge.

There are also deductions and tax discounts that can be applied but these depend on your individual circumstances.

Ready to buy property in Germany?

As the top economy in Europe, home to some of the world’s biggest brands and with a large, skilled and diverse workforce, Germany remains one of the most popular investment areas for real estate and commercial property.

If you’re looking to make the move, click below to see some of the latest property that we have available.

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Why it’s a good time to buy a house in Germany

Germany has long been seen as a smart investment for developers or expats looking for either a second home abroad, or looking to move for work.

Despite the turmoil and uncertainty around the world and the impact this is having on some housing markets, Germany has remained a stable and smart choice as a place to buy a house.

Here’s the main reasons why it’s still a good idea to buy a house in Germany.

Stable housing market

Despite the turmoil of the last year and the uncertainty COVID-19 put on the housing market Germany hasn’t seen any falls in house prices, if anything prices continue to rise at a steady and stable pace.
This is typical of the German housing market which consistently outperforms global trends when it comes to prices.

It’s also because most German residents buy a home for life and don’t have the same relationship to homes as some other European countries like the UK, with buyers typically looking to upgrade or swap homes after a few years.

Long term market trends

This is a long term trend in the German housing, particularly for property in its seven big cities.

Between 2009 and 2019, property prices for existing homes in the likes of Munich, Cologne, Hamburg and Berlin increased by 124% on average - Munich itself saw property prices rocket by 178% in those 10 years.

These increases dwarf the housing market rises in other Western European countries over the same period.

In London for example (which remains one of the priciest places in the world for existing property) prices rose by 66% in the same decade from 2009 according to Nationwide.

Missing new home targets

Adding to the strength of the German housing market is the fact that the government is expected to miss its target of 1.5m new homes by the end of this year, so there’ll be no massive new supply to meet the current demand, according to Deutsche Bank.

Strong economy

Germany is widely regarded as the financial and economic centre of the EU and compared to other European countries it has dealt with the current pandemic better than many.

It has also highlighted the robustness of the German economy in that despite all the turmoil around the global economy, Germany has remained stable and has maintained a rate of low unemployment across age groups.

Even during previous recessions Germany has dealt with crises better than most.

This makes it an attractive place for people looking to work abroad as well as invest in a strong property market.

Strong infrastructure

If you’re looking for an investment property to live in and move to Germany, then you can also rely on some of the best services and infrastructure in Europe and around the world.

Germany has a generous and accessible healthcare system and some of the best international schools in the world.

Investment in infrastructure is consistently high also and Germany boasts some of the best and most efficient transport networks in the EU.

Strong economic immigration

Because Germany boasts such a strong economy and is home to some of the biggest, most well known brands in the world, it is also a key country for immigration and career opportunity.
It is expected that the way Germany has dealt so efficiently with the COVID-19 pandemic that it will see a further influx of immigration and investment in new jobs, just like it did after the 2008 financial crash.
So anyone looking for property investment now would be wise to invest sooner before the market gets too crowded.

Plus, Germany offers a reliable return on investment on rental property as roughly 85% of its population rents rather than owning their own property. So if you’re looking for this kind of property investment you can expect a reliable return.

Ready to invest in German property?

If you’re thinking about investing in a property in Germany then get in touch with us today.

Our team of experts can work with you to find exactly what you’re looking for to get the most out of your investment.

Get in touch.

Our Key People… A Blend of Diverse Cultures

Having worked since 1992 in the German Property Market I have had some ‘interesting’ experiences; Most good, some bad, a lot happy, some not so.. (a true-life-mix). The one common factor to overcoming tough situations and adversity, in-order to move forward, is the importance of having good people around you. We all need help at times and as an Englishman in a foreign land, Germany, I knew my limitations and leaned on the experience and knowledge of people that I am now privileged to have as colleagues….

Walter our Commercial Director is as American as ‘Apple-Pie’ and mixes a Lawyer’s sense of balance with a pragmatic approach to getting things done. His local knowledge of the small things that work, here in Germany, has been critical in overcoming seemingly insurmountable hurdles. A dry sense of humour also goes a long way….and keeps us all sane and grounded…

Our Property Management expertise is embodied in Markus, a German national, with intimate local knowledge and a network of expert contacts. In his early years he travelled the world extensively and combines those multi-cultural experiences with a stoic German attention-to-detail that ‘oils-the-wheels’ of what is the complex process of managing a large portfolio of properties.

These diverse backgrounds underpin the essence that is GermanHouses.de, a strong blend of different cultures that deliver the Customer experience that helps differentiate us from the crowd, in a market not known for innovation or a service-focused approach (all things that we embrace).

A good business is only as good as it’s happy Customers…. We look forward to welcoming you on your journey with GermanHouses.de….

James B. Pape - Managing Director

As a quick aside - Here’s a graphic representation of what we focus on as a Company…(via our Website Content)

Why Germany?

There are a number of reasons to consider investing in Germany:

Safety and Quality-of-Life

It is an understatement that the world has changed very quickly over the past few months. We are all looking at our lives in a much different way, and for many recent events have only driven to make the important things in our lives, like family, friends and loved ones, the priority. Working from home is now possible with technology, and the idea of a home office given recent events is no longer outside of the ‘norm’.

Families talk more now about the importance of being together than being apart, to make sure those that need just a bit more help than normal gets that help where needed.

We have highlighted here many of our properties that would be suitable for a large family as well facilitate a home office. We will also be happy to inform you of specific information possibly needed for your industry and profession to make the choice easier and more relevant to your circumstances.

Value

Germany has a strong infrastructure and developed social system that lends itself well to maintaining the value in any investments you might make. Real-estate in Germany remains one of the more stable investments in these volatile times.

Security

Security is not just knowing that a paycheck comes in every month and the front door lock is working properly- security also means looking forward into the future knowing that the well-being of family is secured against whatever life may present one with. No doubt, the saying holds true: “Sh*t Happens”, but making sure you are prepared and securing your living environment is a great first step.

Nature

While Germany may often only be held in renown for its Industrial power and incredible manufacturing output, one might be forgiven with thinking that the country is just one big factory. Anything further is from the truth though. Germany has invested over the decades a lot of resources, both financial and geographic, to limit urban sprawl and ensure that nature is well-preserved and in a way that all have equal access to it. The result is an amazing assortment of freely available forests, lakes and hiking trails that are available for public use. Practically every one of our properties always has close access to what German Nature has to offer.

Germany is not just the economic heart of Europe, it is also strategically located physically making travel to other countries just a few hours away …