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Renting vs buying a house in Germany: What you should consider
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For expats in Germany, particularly in cities like Berlin, the decision to rent or buy property is complex. Economic factors such as interest rates, inflation and market conditions make timing and planning essential. ZIEGERT explores what expats should consider when choosing between renting and buying property in Germany.


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Dr. Matthias Schoen
Dr. Matthias Schoen has served as Chief Operating Officer (COO) of ZIEGERT Group Holding GmbH since January 2022. In this role, he oversees the areas of Marketing, Communications/PR, Project Management, IT, and is responsible for digital transformation and process optimization. He studied Business Administration at WHU Koblenz and earned his doctorate in Economics from the University of the Bundeswehr Munich. With over ten years of leadership experience, including roles at Trademob and LIDL Digital, he brings extensive expertise in product and business development.Read more

Renting vs buying a house in Germany: What you should consider

Paid partnership
Nov 5, 2024
Paid partnership

Germany's housing market has experienced significant fluctuations in recent years. After a period of rising interest rates and inflation, conditions have shifted. Interest rates currently hover around 3 percent, offering more favourable terms for potential buyers. Lower rates translate to substantial savings on long-term mortgage costs.

However, property prices are expected to continue to rise, due to strong demand and a limited supply of new housing developments, especially in cities like Berlin. The city remains one of Germany’s fastest-growing urban areas, and rental prices have steadily increased. In Berlin, rents for new-build apartments in trendy districts such as Kreuzberg are up to 26 euros per square metre, making buying a more appealing option as rents continue to rise.

The case for buying a home in Germany

For expats intending to stay in Germany long-term, purchasing property offers several financial advantages over renting. Homeownership provides stability and protects against future rental price hikes. As interest rates are low, buying a property may lead to lower monthly payments compared to continually rising rent prices, especially in high demand urban areas like Berlin.

Furthermore, owning a home helps to build long-term equity, allowing owners to benefit from potential property value appreciation. While upfront costs, such as a down payment and closing fees, can be high, they are often offset by long-term savings and future resale value. Expats with stable finances and the ability to place a 20 percent down payment can secure lower mortgage payments, making buying an even more attractive option.

The case for renting a home in Germany

For expats prioritising flexibility or those who are uncertain about their long-term plans in Germany, renting may be the better choice. Renting allows greater mobility, making it easier to relocate for career changes or personal reasons.

Renting also relieves tenants of the financial and practical burdens associated with homeownership, such as property upkeep, repairs and maintenance. For expats who prefer to avoid these responsibilities, renting provides convenience, particularly in avoiding additional costs like property taxes and potential renovations.

Key considerations for expats

When deciding between renting and buying, expats should carefully assess their individual circumstances:

1. Length of stay

Those planning to remain in Germany for at least five to 10 years may benefit financially from buying, as this allows time to recover the upfront costs and build equity. In contrast, shorter stays may not justify the initial expenses of homeownership.

2. Interest rates and market conditions

Current low interest rates make buying more appealing, but rates could rise in the future. Market conditions could also shift, affecting both house prices and rental yields. Expats should monitor trends carefully.

3. Financial stability

Buying a home requires significant financial stability, with upfront costs such as the down payment, taxes and closing fees. Expats need to ensure they have sufficient funds to cover these expenses and manage the long-term commitment of a mortgage.

4. Property maintenance

Homeownership involves ongoing costs, including maintenance, repairs and potential renovations. Renting transfers these responsibilities to the landlord, which can provide peace of mind for those who prefer to avoid these costs. However, owning a home offers the potential for stability and property value appreciation.

5. Tax implications and interest security

In Germany, property owners can deduct mortgage interest, property taxes and some maintenance costs from their taxes. In addition, the interest rate in Germany is fixed for the long term (usually 10 or 15 years), which makes it easy to plan ahead.

In countries such as the USA or the UK, on the other hand, loan agreements are often concluded with variable interest rates, where the interest rate is regularly adjusted based on a reference interest rate, which entails the risk of rising installments and makes long-term planning impossible.

Timing and market outlook

As interest rates have fortunately fallen again since 2023 and are currently at an attractive level, and property prices are expected to rise again, now could be a good time for expatriates to consider a purchase. Real estate markets in cities like Berlin are likely to see continued demand growth, while new housing development remains limited. This will likely drive property prices upward in the coming years.

Waiting for further reductions in interest rates may not be beneficial, as property values could increase, potentially offsetting any savings from lower interest rates. Locking in current rates while property prices are still relatively manageable could be a strategic move for expats looking for long-term stability and financial growth through homeownership.

Rental price development

Evaluate your personal situation

For expats weighing the decision to rent or buy property in Germany, it is crucial to assess personal circumstances, financial stability, and market conditions. Buying offers long-term benefits, particularly in an environment of rising rents and low interest rates, but it also comes with financial commitments. On the other hand, renting offers flexibility and relieves expats of property maintenance responsibilities. Expats should carefully evaluate their long-term goals, financial readiness, and market timing before making their decision.

Do you need some help deciding what’s best for your personal situation: renting or buying? ZIEGERT is here for all your real estate and financing needs. Contact them now.
Book a free, non-binding consultation
By Dr. Matthias Schoen