The minister promised to create a “successor” for the Baukindergeld, as a “subsidy for people who want to build themselves”. In addition, there are currently negotiations with the federal states on the future of the real estate transfer tax.
(Photo: dpa)
Dusseldorf In their coalition agreement, the SPD, Greens and FDP promised: “We want to enable more people in Germany to live in their own homes.”
However, the traffic light has not yet taken any major steps in this direction. On the contrary: due to the chaos surrounding the energy efficiency subsidy from the state KfW bank, many construction projects were postponed – including by families. Most recently, Federal Building Minister Klara Geywitz (SPD) described the construction of new single-family homes as economically and ecologically nonsensical.
Also this Thursday at the day of the construction industry, Geywitz hardly said a word about how the purchase of a home could be promoted in the future.
She promised to create a “successor” for the Baukindergeld as a “subsidy for people who want to build themselves”. In addition, Finance Minister Christian Lindner (FDP) is currently negotiating with the federal states on the future of the real estate transfer tax.
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The budget for 2022 shows that six million euros are to be made available via a KfW program to purchase cooperative shares for owner-occupied living space, so that young families with average incomes can also buy their own home.
Geywitz said: “I know that the general conditions are difficult.” She is correct. And that is not only related to the consequences of the corona crisis and the Ukraine war:
- Exploding construction costs: Building is getting more and more expensive. There was a six percent increase in construction prices last year – according to the Central Association of the German Construction Industry (ZDB), the strongest increase in more than 20 years. And the trend continues to point upwards. This has to do with the delivery capacities of the manufacturers, interrupted supply chains and rising energy costs, but is also due to the sharp rise in material prices. According to data from the Federal Statistical Office, the prices for solid structural timber alone have recently risen by a good 77 percent, for roof battens by 65 percent and for reinforcing steel products by almost 53 percent.
- Rising real estate prices: Residential real estate is becoming more and more expensive. In 2021, the prices for residential real estate increased by eleven percent on average nationwide. Although interest rates are now rising, the demand for real estate is still very high. Real estate prices are therefore likely to continue to rise for the time being.
- Rising interest rates: Building rates are rising. This makes financing a residential property more expensive. Those who could previously only afford the purchase because of the extremely low interest rates could now shy away. Mirjam Mohr, board member at the financing broker Interhyp, calculates: The increase in interest rates for ten-year loans from one to 2.6 percent means that the monthly rate for a real estate loan of over EUR 300,000 and an initial repayment of three percent will increase from EUR 1,000 to EUR 1,400. In ten years that would be 48,000 euros. With a loan amount of EUR 500,000, the additional interest costs would add up to around EUR 80,000 in a decade.
- High additional purchase costs: In addition to brokerage commission and notary’s fee, the real estate transfer tax is the main factor when buying a home. This varies from country to country and ranges from 3.5 percent to 6.5 percent of the purchase price of owner-occupied living space. Since equity usually has to be used for the additional purchase costs, the items represent a major hurdle for buying a house.
- Missing skilled workers: The shortage of skilled workers is considered an urgent problem in the construction industry. According to a survey by the Association of German Chambers of Industry and Commerce (DIHK), 78 percent of construction companies at the beginning of the year named a lack of skilled workers as a risk to their own economic development. According to the Main Association of the German Construction Industry (HDB), the personnel capacities in the German construction labor market are tight and there are only limited manpower reserves. The consequences: the dream of owning a home is becoming increasingly unrealistic for many.
>> Read more: Homebuyers are faced with even higher lending rates
In fact, many dream of their own four walls. According to a current Interhyp Wohntraum study, around 72 percent of tenants in Germany wanted their own property last year. For young people in particular, owning a home is a dream.
So far, Germany has brought up the rear in an EU comparison when it comes to home ownership: According to the Federal Statistical Office, only around 42.1 percent of German households currently have their own four walls.
Union push
The Union is now advancing. The construction policy spokesman for the CDU/CSU parliamentary group, Jan-Marco Luczak (CDU), criticizes: “There is a big gap in traffic light policy”. In reality, nothing remains of the “noble goals and euphonious promises” for more property formation in the coalition agreement. Not a single initiative for more home ownership is planned in the budget.
In a motion that the Bundestag will debate for the first time on Friday, the Union faction is now calling on the federal government to take concrete steps:
For example, the federal government should enable the federal states to introduce a real estate transfer tax exemption of EUR 250,000 per adult and EUR 150,000 per child when buying owner-occupied residential property for the first time.
Luczak assumes that a family of four would then no longer have to pay real estate transfer tax. He considers it realistic that the federal states actually grant such opportunities for tax exemptions, and that compensation is unnecessary. “There is room for maneuver in the state budgets,” explained the CDU politician. Recently, the federal government has taken over many of the financing tasks of the federal states.
In addition, according to the will of the Union faction, the federal government should promote the first purchase of owner-occupied real estate, especially for families with low and middle incomes.
The application states: “To this end, the KfW home ownership program is to be expanded and government-backed hire-purchase models are to be developed that take into account criteria such as the number of children, income levels and design features such as flexible floor plans and square meter consumption per capita.”
The number of building permits for single-family homes is falling significantly
The Union is also calling on the government to promote the purchase of owner-occupied residential property in existing buildings with the “Young buys old” program and to develop an initiative for building land together with the municipalities in order to counteract the lack of building land.
The union application states: “Millions of people in Germany dream of their own four walls. Owning your own home in the countryside or a condominium in the city are expressions of self-realization and lived freedom.”
Acquisition of property also serves to provide for old age and protect against inflation. “It must therefore also be possible for people with low and middle incomes and especially families to form their own property,” it continues.
However, it is already becoming apparent that people are finding it increasingly difficult to buy their own home: in the first three months of the current year, the number of building permits for single-family homes fell by a significant 26.2 percent to 20,778.
More: State real estate holding: Bima will not change to Minister of Construction Geywitz in the foreseeable future.