Uh is there more explanation on this “break even”math because it really doesn’t make sense?
Not sure in what world it would be prudent to pay over 1,3 million€ for a 60qm apartment (probably with a mortgage of 2000€+ per month) instead of paying 800€ rent
lol, the last column is complete BS
Just focusing on the big cities paints a distorted picture
The last column for Berlin is simply the first column multiplied by 1500, or renting for 125 years (1500/12), leaving out maintenance and repair cost which is included in the 14.91, but assuming some value after all those years? Many more detail are needed to make sense of this.
Not just German but the whole world. See New Zealand, Canada its much worse …..
I come from Canada, and its much worse there..
Prices are increasing like crazy not to mention, prices have increased over 24℅ last year in Canada taking average house cost to a million dollar. Forget about getting anything decent in less than $1.5 Million in GTA 🥴 considering income is still very low. At least, rents in Germany are more affordable compared to Canada.
Thats total BS. Assuming 0% taxes, 0% interest and no upkeep at all for the property it would (in the Stuttgart example) take up 143 years of rent to buy property at that price.
So in all reality you need to live in the property for about 200 years for this purchase to be worth it. Seems a little long to me.
Housing in Germany is really really weird, not sure if this is everywhere but prices in my medium sized city range from (or did when we sold last year) 2000 per sqr mtr for a hochhaus, to 2500 for a 60s building, 4000 or so for a newerish (mid 80s to 90s) and 5000 plus for a new build
Tbh i feel like crying looking at these prices, since they dont really change if you get further away from those big cities…
At some point in my life id like to own a housing, it doesnt even have to be big but with my 23 years old and about 1000€ a month i can save up (quite a lot for average person) i wont even be able to buy a small house in 40 years, not to mention the rising prices per year…
Just makes me sad about life…
I was like „over 19€?!“ that sounds way to much. Then I calculated my rent in €/qm … I pay over 20€ apparently and it is not a new build property … munich is just insane.
Yeah, we were “lucky” to buy an apartment last year with 1.17% interest over 15 years.
Checked yesterday how’s the housing market… Around 3% interest. So, I’ve input the same initial variables (Darlehensbetrag, Tilgung, etc) and was shocked that my monthly rate will be almost 40% more, and almost half of them are interest payments initially (our current is under 30%).
If you’re not a rather high earner to allow yourself to pay Sondertilgung, you will be mostly paying debt for your house…
Where is this taken from /u/Glass_Engineering_84 ?
this entire calculation makes no sense and needs to be explained.
The biggest problem is that nowadays real estate has become more of an investment and not necessity, meaning that a lot of companies and people bought flats with the idea that their prices would go up and they can rent it out in the meantime.
That’s completely broken, because it is creating a false scarcity on the market and inflating the prices. Currently Munich is severely overpriced and making the cost of living unbearable for the low-mid income earners, who need to pay a huge chunk of their salaries. The whole trend in my opinion is highly unsustainable and we urgently need new legislation policies dissuading potential Investors into hoarding those flats.
@ everyone who says that it’s just due to increased demand / population: partly, yes. But the population increase is in no proportion to these rises. Profiteering is a big part of it too. It also didnt help that we stopped building social housing.
What does it mean to break even?
The most expensive housing (I know of) sold here in Hamburg had a price tag of 10.000 Euro per m2, and that was for luxurious residences on the Außenalster furnitured by Karl Lagerfeld.
The title of this post is broken. And bullshit.
Leipzig 👍
19.58 € per sqm in Munich? I am doing something wrong as I am paying around 32 € per sqm😅
Yeah – this calculation has major flaws. My family owned a house in Berlin 15 years ago. While it is true, you don’t pay rent, a lot of the houses in Berlin are rather old and need a lot of care and work. I remember that I spend several holidays just working on the cracks that appeared all the time, not to mention the stuff that could only done by a specialist. While I don’t think it amounted to the same as renting, it was definitly not cheap.
What is missed in these calculations is that with the rent, there is a “fuck you landlord, that is not my job. Come here and do and pay the shit for me, and by the way, won’t pay x % of my rent until you are done”-portion in the rent that is quite substantial. Even when it is currently not used for repairs, a house owner needs to have a backup of considerable percentage of the house value (the older, the higher) for repairs that might suddenly pop up that the rent has to pay.
The most pressing question to me is just why Stuttgart. I’ve never seen an uglier city in my life :’)
There is a simple common rule: if you can make good on the price after 20 years of rent then the offer is excellent. For 25 years the offer is still good and for anything past 30 years the offer is overpriced.
So if you can let a 100m² property for €1.491 per month and deduct taxes you arrive roughly at €1.000 pm.
For an estimated purchase price (assuming all included) of €710.900 you would need to rake in about €2.900 rent per month for it to be an excellent return and for €1.975 it would be borderline overpriced.
These figures are not even close to the €1.000 you get after taxes meaning purchase prices are FAR ahead of renting prices which is indeed the actual problem – most purchse prices factor in that the buyer has the money and it is burning a hole in his pocket on the advent of negative interest rates when the reality is often enough that this is not the case.
This picture is just broken.
Where did you got that info chart from?
If you own a property, you would understand the rent is not related to the property price but related to the mortgage interest. So this comparison doesn’t make sense.
This is really unbelievable. Thank god I managed to purchase my flat before shit hit the fan. Paid 220k for 110m2 flat just 10km outside of the city, now it worths around 380-400k in just 4 years. When I purchased my flat, same size flats were 400k in city center, they are now above 600-800k range and I am not taking about big cities like cologne or Munich, I am talking about Karlsruhe
Chiming in as someone who has made financial models for developers and investors, this is just bullshit. If I calculate their discount rate for their Berlin valuation, then I get 2,5% which is outrageously low. No way in hell should you pay 7K/m for a property that rents out for only €15/m. Current discount rates should be between 3,5% and 4%, especially with rising interest rates.
Their entire break-even calculation makes zero sense too. The broken English makes this seem really shady as well. Where did you find this? This seems more like a scam website trying to sell you some insanely overpriced property than anything else. I wouldn’t touch this with a ten foot pole.
26 comments
Uh is there more explanation on this “break even”math because it really doesn’t make sense?
Not sure in what world it would be prudent to pay over 1,3 million€ for a 60qm apartment (probably with a mortgage of 2000€+ per month) instead of paying 800€ rent
lol, the last column is complete BS
Just focusing on the big cities paints a distorted picture
The last column for Berlin is simply the first column multiplied by 1500, or renting for 125 years (1500/12), leaving out maintenance and repair cost which is included in the 14.91, but assuming some value after all those years? Many more detail are needed to make sense of this.
Not just German but the whole world. See New Zealand, Canada its much worse …..
I come from Canada, and its much worse there..
Prices are increasing like crazy not to mention, prices have increased over 24℅ last year in Canada taking average house cost to a million dollar. Forget about getting anything decent in less than $1.5 Million in GTA 🥴 considering income is still very low. At least, rents in Germany are more affordable compared to Canada.
https://globalnews.ca/news/8878270/housing-costs-concern-southwest-ontarians/
> Home prices in Canada have soared more than 50% over the past two years.
https://fortune.com/2022/04/07/canada-trudeau-plan-curb-house-prices-ban-foreigners-buying-homes/
Thats total BS. Assuming 0% taxes, 0% interest and no upkeep at all for the property it would (in the Stuttgart example) take up 143 years of rent to buy property at that price.
So in all reality you need to live in the property for about 200 years for this purchase to be worth it. Seems a little long to me.
Housing in Germany is really really weird, not sure if this is everywhere but prices in my medium sized city range from (or did when we sold last year) 2000 per sqr mtr for a hochhaus, to 2500 for a 60s building, 4000 or so for a newerish (mid 80s to 90s) and 5000 plus for a new build
Tbh i feel like crying looking at these prices, since they dont really change if you get further away from those big cities…
At some point in my life id like to own a housing, it doesnt even have to be big but with my 23 years old and about 1000€ a month i can save up (quite a lot for average person) i wont even be able to buy a small house in 40 years, not to mention the rising prices per year…
Just makes me sad about life…
I was like „over 19€?!“ that sounds way to much. Then I calculated my rent in €/qm … I pay over 20€ apparently and it is not a new build property … munich is just insane.
Yeah, we were “lucky” to buy an apartment last year with 1.17% interest over 15 years.
Checked yesterday how’s the housing market… Around 3% interest. So, I’ve input the same initial variables (Darlehensbetrag, Tilgung, etc) and was shocked that my monthly rate will be almost 40% more, and almost half of them are interest payments initially (our current is under 30%).
If you’re not a rather high earner to allow yourself to pay Sondertilgung, you will be mostly paying debt for your house…
Where is this taken from /u/Glass_Engineering_84 ?
this entire calculation makes no sense and needs to be explained.
The biggest problem is that nowadays real estate has become more of an investment and not necessity, meaning that a lot of companies and people bought flats with the idea that their prices would go up and they can rent it out in the meantime.
That’s completely broken, because it is creating a false scarcity on the market and inflating the prices. Currently Munich is severely overpriced and making the cost of living unbearable for the low-mid income earners, who need to pay a huge chunk of their salaries. The whole trend in my opinion is highly unsustainable and we urgently need new legislation policies dissuading potential Investors into hoarding those flats.
@ everyone who says that it’s just due to increased demand / population: partly, yes. But the population increase is in no proportion to these rises. Profiteering is a big part of it too. It also didnt help that we stopped building social housing.
What does it mean to break even?
The most expensive housing (I know of) sold here in Hamburg had a price tag of 10.000 Euro per m2, and that was for luxurious residences on the Außenalster furnitured by Karl Lagerfeld.
The title of this post is broken. And bullshit.
Leipzig 👍
19.58 € per sqm in Munich? I am doing something wrong as I am paying around 32 € per sqm😅
Yeah – this calculation has major flaws. My family owned a house in Berlin 15 years ago. While it is true, you don’t pay rent, a lot of the houses in Berlin are rather old and need a lot of care and work. I remember that I spend several holidays just working on the cracks that appeared all the time, not to mention the stuff that could only done by a specialist. While I don’t think it amounted to the same as renting, it was definitly not cheap.
What is missed in these calculations is that with the rent, there is a “fuck you landlord, that is not my job. Come here and do and pay the shit for me, and by the way, won’t pay x % of my rent until you are done”-portion in the rent that is quite substantial. Even when it is currently not used for repairs, a house owner needs to have a backup of considerable percentage of the house value (the older, the higher) for repairs that might suddenly pop up that the rent has to pay.
The most pressing question to me is just why Stuttgart. I’ve never seen an uglier city in my life :’)
There is a simple common rule: if you can make good on the price after 20 years of rent then the offer is excellent. For 25 years the offer is still good and for anything past 30 years the offer is overpriced.
So if you can let a 100m² property for €1.491 per month and deduct taxes you arrive roughly at €1.000 pm.
For an estimated purchase price (assuming all included) of €710.900 you would need to rake in about €2.900 rent per month for it to be an excellent return and for €1.975 it would be borderline overpriced.
These figures are not even close to the €1.000 you get after taxes meaning purchase prices are FAR ahead of renting prices which is indeed the actual problem – most purchse prices factor in that the buyer has the money and it is burning a hole in his pocket on the advent of negative interest rates when the reality is often enough that this is not the case.
This picture is just broken.
Where did you got that info chart from?
If you own a property, you would understand the rent is not related to the property price but related to the mortgage interest. So this comparison doesn’t make sense.
This is really unbelievable. Thank god I managed to purchase my flat before shit hit the fan. Paid 220k for 110m2 flat just 10km outside of the city, now it worths around 380-400k in just 4 years. When I purchased my flat, same size flats were 400k in city center, they are now above 600-800k range and I am not taking about big cities like cologne or Munich, I am talking about Karlsruhe
Chiming in as someone who has made financial models for developers and investors, this is just bullshit. If I calculate their discount rate for their Berlin valuation, then I get 2,5% which is outrageously low. No way in hell should you pay 7K/m for a property that rents out for only €15/m. Current discount rates should be between 3,5% and 4%, especially with rising interest rates.
Their entire break-even calculation makes zero sense too. The broken English makes this seem really shady as well. Where did you find this? This seems more like a scam website trying to sell you some insanely overpriced property than anything else. I wouldn’t touch this with a ten foot pole.