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Most Germans don’t buy their homes, they rent

qz.com

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Re: Most Germans don’t buy their homes, they rent

#81

Post by ethanbond »

kriro wrote: post #61
webkike wrote: post #23

Earlier quoted context omitted.

Using credit cards does not preclude being able to afford the thing you are paying for. I regularly use my credit card for every day purchases despite having ample money in my checking account. The regular payments allow me to develop a good credit history without much worry.

Why can't you use a debit card for that? Isn't having enough money in your checking account to reasonably afford all stuff you need to live basically proof of a good credit history? Isn't the best credit history one where you never need credit in the first place?

Not according to the credit rating agencies, no, it's not.

Handling debt responsibly is a different skill from handling cash responsibly. When it comes time to buy a home, for example, which 99% of people will need credit to do, the banks want to see that you can handle debt responsibly, since that's what you're taking on.

Edit: Also, see my reply to GP comment that explains some of the other benefits of using a credit card.

Re: Most Germans don’t buy their homes, they rent

#82

Post by petra »

mto wrote: post #19
DocTomoe wrote: post #2

Being German I want to pPoint out that the article leaves out one cruicial detail: Building your own home puts you into debt for quite literally the rest of your life. We do not like debt.

Same for Austria. Then considering that you might change jobs every few years... and the jobs are mostly in the cities, where you can't afford building a house. We live in a small to medium size flat for 380€/month, including some running costs. Buying it would cost roughly 250k. That just doesn't pay off. Most medium sized houses are about 700k€ in the region, with typical software developer wages at 2-4k€/month bef…

So what happens to people when they are old , and maybe they're pension isn't that good ?

Re: Most Germans don’t buy their homes, they rent

#83

Post by cylinder »

buro9 wrote: post #3
DocTomoe wrote: post #2

Being German I want to pPoint out that the article leaves out one cruicial detail: Building your own home puts you into debt for quite literally the rest of your life. We do not like debt.

Yup. Germany has one of the lowest adoption rates of credit products such as the humble credit card out of nearly all Western nations. Debt is not liked. Edit: From the same site, the linked article at the bottom has the answer: http://qz.com/262595/why-germans-pay-cash-for-almost-everyth... A better link: http://www.businessinsider.com/you-have-to-understand-german...

And yet the public debt of Germany is just as high as these credit addicted nations, what does that say?

Re: Most Germans don’t buy their homes, they rent

#84

Post by fwn »

josefresco wrote: post #40
webkike wrote: post #23

Earlier quoted context omitted.

Using credit cards does not preclude being able to afford the thing you are paying for. I regularly use my credit card for every day purchases despite having ample money in my checking account. The regular payments allow me to develop a good credit history without much worry.

Bingo. Unfortunately the common assumption is that you're not paying it off monthly and paying high interest.

Which, by the way, sounds like an awful concept of how creditworthiness is created.

Signing into some unnecessary additional financial product with comically obsolete interest rates, just to manually repay it in the random timeframe in which the (still unnecessary) credit is free sounds like a bad idea.

It's probably only there to nudge people into paying interest on money they already have.

Re: Most Germans don’t buy their homes, they rent

#85

Post by LeanderK »

ricksplat wrote: post #52
LeanderK wrote: post #29

I am a German CS-Student and currently renting in a shared flat with 4 other students. We call it WG (living-community) and its really popular not only with students, but i know a lot of young professionals and even middle aged ones that share an apartment (it gained popularity in the 60s, so i think its more of an culture thing that older do not share a flat). If you are in a partnership, you can move out and share…

That's all well and good as long as you're a student, or partying your twenties away and as long as everybody in the house gets on .... I've done this, and while it is good fun in parts the downsides become downright tiring.

i recently searched for a new shared apartment and there were plenty of offers that were looking explicitly for professionals and not students because of the reasons you stated above. I also know of older ones living in a shared apartment (though not as a rule). I can imagine moving together with a partner or switching apartment because of the reasons you mention above, but living alone is not something i want to do. But i understand there are reasons some don't want live in a shared apartment.

I think what i want to say is that for most living in a shared apartment is not a thing out of necessity anymore, but out of choice

Re: Most Germans don’t buy their homes, they rent

#86

Post by Noseshine »

fwn wrote: post #59
Noseshine wrote: post #26

Earlier quoted context omitted.

From the PoV of someone who once co-owned a small business in Germany that accepted card payments: The reason they are "evil" is that they charge the dealer the by far largest fees. Cache: no fee. EC card: small fee. Credit card: large fee. And of course I can't ask the customer to pay for it, I must have one price for all. It was something like 1% vs. 3% (approximately(!), just to give an idea of magnitude). It's no…

That's quite interesting. I rent cars quite frequently with the boring free VISA debit card from my normal checking account. I never knew that there are restrictions on which cards can be used for renting.

It's not so much a restriction, and it differs from company to company.

For example, I rented twice this year - I don't own a car and usually use the train - and the first time they wanted my to enter the PIN for the credit card, which I didn't know. A big hassle, they took (real!) money off of my EC card (which I got back afterwards).

The second time I didn't need a PIN (different car rental company), but they helped themselves to almost 800 Euros in alleged damages from my credit card (good thing I had used an online service and opted into the "we pay the deductible", which was 1,000 Euros, on the full insurance I had also selected to get).

Re: Most Germans don’t buy their homes, they rent

#87

Post by codingdave »

whack wrote: post #39

The Germans seem to be far ahead of the curve here. From a financial planning perspective, buying a home results in: 1) The vast majority of your assets becoming concentrated in a single plot of land, in a single neighborhood, in a single city 2) Your future mobility to pursue jobs in other cities, becoming significantly constrained If you want to invest your savings, then invest them in the stock/bond markets. If yo…

1) Right. That is called your "home". You invest most of your efforts and resources there to provide a home for yourself and your family that can be a long-term stable place to live.

2) Again, this is OK if you want a "home".

Your recommendations are based on assumptions that people want to maximize their money. Most people I talk to (most people over 30, at least) are willing to have less money in exchange for a better overall life.

How to balance money with intangibles is a personal choice. But the "financial planning perspective" is just one piece of the puzzle, not the big picture.

Re: Most Germans don’t buy their homes, they rent

#88

Post by ygra »

adrianratnapala wrote: post #30
pyb wrote: post #16

Who owns most of the homes then ? Institutional investors ?

The home ownership percentage is still 43%, so not that low. Landlords seem to be the usual mix of older, upper-middle proffessionals that you see in other countries. It's just a bit more concentrated. Also there are many houses which have two or three appartments. The owner will live in one appartment, and either have a different generation of their family in the other ones, or else rent it for money.

In my home city (Rostock) a large portion of flats are owned by a single, large-ish company. A stark difference to now (Tübingen) where most flats are owned by individuals. Personally it's much easier to handle contractual stuff (which renting always entails) with a company instead of a person. At least landlords here tend to have trouble distinguishing contractual interactions (reducing rent resulting from unfixed issues, complaints about things to be fixed, etc.) and dealing with them as a person. With the landlord living just two streets away they're sometimes inclined to take things personal and show up on your doorstep.

Re: Most Germans don’t buy their homes, they rent

#89

Post by cylinder »

tksap wrote: post #22
wil421 wrote: post #10

Earlier quoted context omitted.

What about cars? Are Germans more likely to buy or lease a new car? Or do more people buy used cars with cash?

You buy the car you can afford. I would only take a credit if I wanted to buy or build a house.

In 2014, 27% of all car purchases in Germany were financed.

Re: Most Germans don’t buy their homes, they rent

#90

Post by randiantech »

cm2187 wrote: post #5

So in Germany, the interest on a mortgage is non tax deductible. The article doesn't mention it but I understand that property owners are also liable for capital gain tax if they hold the property less than 10 years. I think that makes sense. There is no reason to favor individuals investing into an unproductive investment (property) over productive investments (stocks and bonds, which enable companies to raise money…

So are you recommending to invest savings on stocks and bonds rather than a house? I mean, I wont argue / refute you reasoning, I just simply dont have the knowledge to do a proper analysis. Ill just say that my 78 years old parents, that not even finished high school, always told me to first buy a house, then think about the rest. Being an owner feels like the best decision Ive ever made. If something happens to me, I have the safety that my family have a place to live in.
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