German Housing

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Constructive Yields

Housing prices in Germany are rising as demand for owner occupied dwellings increases for the rising levels of employed.

But only about 53% of Germans own their homes, compared with 70% in the U.K. and Canada and 65% in the U.S. 

Since the end of WW II, the national consensus in Germany has been that housing provision is an essential public resource to be protected from speculation using regulation that promotes rental accommodation and fosters tenancy protection as well as municipal planning that releases land with incentives for developers to create rental housing when needed.

As the lower panel of the chart mashup above shows, a big incentive to provide rental housing is the yield on rentals being superior to Government 10 year bonds and stock dividends over time.

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In the OECD, German households on average spend 21% of their gross adjusted disposable income on keeping a roof over their heads and 93% of people say they are satisfied with their current housing situation, more than the OECD average of 87%. This high level of subjective satisfaction reflects Germany’s good performance in objective housing indicators. SOURCE

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