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MONEY

How the cost of living crisis is affecting people in Germany

Energy and some supermarket items in Germany are rising in price much faster than the overall inflation rate - and that has more than half of German households worried about their budgets, a new survey shows.

Published: 4 October 2022 16:19 CEST
Updated: 9 October 2022 07:55 CEST
A supermarket trolley full of groceries. The prices of everyday items have gone up considerable in Germany in recent months.
A supermarket trolley full of groceries. Photo: picture alliance/dpa | Fabian Sommer

What’s happening?

With the cost of everyday items spiralling upwards, many people in Germany are feeling the strain. And a new survey has laid bare the impact on people.

Around 57 percent of people in Germany say rising prices are a “big problem” for them personally, according to a recent poll.

That’s a marked increase from July, when public broadcaster ZDF asked the same question and found that only 40 percent of respondents were concerned about rising costs at that time.

In some cases, energy prices have more than doubled.

The price of natural gas – which around half of German households use for heat – has quintupled in some cases.

READ ALSO: German households see record hikes in heating costs

What else is going up in price?

It’s not just the price of energy that’s rising steeply. Anyone who has gone to buy groceries in the past months will have noticed a major increase.

One analysis from Focus news magazine found that the price of several common supermarket items had rocketed upwards once more, with many grocery stores and discount retailers having increased their prices on October 1st to adjust to higher costs on their end.

At a 65 percent increase, sugar saw one of the biggest price hikes. The price for a kilogram of powdered sugar specifically, doubled.

Butter biscuit prices – a common snack in Germany – are up 20 percent, while coffee cream and honey both increased by 30 percent.

The price of ketchup climbed by 50 percent.

Goose leg and goose breast – typical German delicacy for holidays like Christmas – doubled in price to over €20 in some Munich shops, due to higher feed and transport costs recently.

57 percent of Germans reported that price increases were becoming a “big problem” for them in September 2022. Poll by ZDF.

What does this mean for people?

Those increases are far above the German inflation rate. Currently sitting at around 7.9 percent, the country’s inflation rate has broken post-war records several times already this year.

But one study finds many Germans feel – and act – as if the rate is much higher.

According to an Internationale Hochscule study done exclusively for the Welt newspaper, the Inflationsgefühl – or what respondents feel the inflation rate is actually like – sits at 34 percent.

Just over half those surveyed in that study reported they were “very concerned” about rising prices. Meanwhile, 37 percent said they are “somewhat concerned”.

Over 80 percent expect the problem to get worse.

Study authors say people in Germany may be overestimating the rate of inflation because the biggest increases are in areas they’ll tend to notice every day.

“We always perceive inflation where we have consumer spending,” International Hochschule Business Administration Professor Johannes Trey told Welt. “People are interested in what they have to pay every day to meet their basic needs.”

Most respondents say they’re planning on cutting spending in certain areas, with cuts in purchases for furniture, appliances, and travel the most popular cost saving measure. Around 80 percent say they’re making an effort to curb their electricity use.

READ ALSO: EXPLAINED: When should I turn on my heating in Germany this year?

Respondents are less likely to cut down on luxuries such as alcohol and tobacco—or media consumption like buying newspapers or streaming subscriptions.

Support for Ukraine still high despite price pressure

Although the financial stress people in Germany are experiencing has gone up, the general level of support for Ukraine among everyday Germans is still high – despite the war being one of the main causes of the record high inflation levels.

ZDF’s poll asked “should we keep supporting Ukraine even though it means higher prices for us?”

And 74 percent said “Yes” in September.

Although the upcoming winter is expected to come with even more financial strain, that number has trended slightly upward over the last three months.

Despite more than half of German households saying they’re under financial stress, most say support for Ukraine should continue. Poll by ZDF.

Meanwhile, the federal government is currently preparing a new €200 billion package of support, on top of the €100 billion already passed by the Bundestag over the last few months.

The package is expected to provide inflation relief by introducing everything from a temporary cap on the price of gas to a successor to summer’s €9 nationwide public transport ticket.

READ ALSO: Germany to thrash out details of €200 billion energy support package

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PROPERTY

Who pays broker’s fees on property in Germany – and how much do they cost?

One of the major hidden costs of buying and selling property in Germany is the estate agent's commission, or broker's fee. We look at some of the unusual rules around it - and how much you can expect to pay.

Published: 17 September 2024 16:25 CEST
Who pays broker's fees on property in Germany - and how much do they cost?

There are many areas of life in which things in Germany function just that little bit differently – and buying a house is no exception.

Though the buoyant property market in the Bundesrepublik makes it an attractive place to buy, anyone looking to get their foot on the housing ladder should consider the hidden fees they might incur.

Beyond interest rates, taxes and fees for notaries and translators, one major outlay is the estate agent’s commission, which can sometimes stretch to thousands of euros.

Here’s what to know about these hefty fees and how you might be able to lower them. 

Who pays commission on property transactions in Germany?

If you come from another European country or somewhere like the United States, you may be used to a system in which the seller pays the broker’s fee. This intuitively makes sense because the estate agent is there to market the property, liaise with buyers and ultimately get the best price for the seller – so it makes sense that the seller should pay for these services.

Until recently, however, it was the buyer who was responsible for paying the entirety of the estate agent’s commission in Germany. That meant that these fees – which could be as high as seven percent of the purchase cost – were added to the mountain of extra costs buyers had to contend with, from notary fees to land transfer tax.

READ ALSO: The hidden costs of buying a house in Germany

Luckily for buyers (but less so for sellers), this was changed under a law that came into force at the end of 2020. Since then, costs are generally split 50/50 between buyers and sellers.

However, there are some details that are important to note here. If the seller commissions the estate agent to help them sell their home, they are technically liable for the costs but must pay a minimum of 50 percent. 

If the buyer commissions the estate agent to find them a home, the same rules apply the other way around: the buyer is liable for the costs but can obtain a maximum of 50 percent from the seller.

In each case, the side that commissioned the broker must prove they have paid their share before the other side is liable to pay theirs. 

How much do estate agents’ fees cost in Germany?

Commission on property sales varies from state to state but is generally set at between 5 and 7 percent of the purchase price.

According to online portal ImmobilienScout24, these were the standard rates that applied in each of the federal states in 2024, with the number in brackets representing a 50 percent share of the costs:

Baden-Württemberg: 7.14 percent (3.57 percent)

Bavaria: 7.14 percent (3.57 percent)

Berlin: 7.14 percent (3.57 percent)

Brandenburg: 7.14 percent (3.57 percent)

Bremen: 5.95 percent (2.97 percent)

Hamburg: 6.25 percent (3.12 percent)

Hesse: 5.95 percent (2.97 percent)

Lower Saxony: 4.76 – 5,95 percent or 7.14 percent, depending on the region. (2.38 – 3.57 percent)

Mecklenburg Western-Pomerania: 5.95 percent (2.97 percent)

North Rhine-Westphalia: 7.14 percent (3.57 percent)

Rhineland-Palatinate: 7.14 percent (3.57 percent)

Saarland: 7.14 percent (3.57 percent)

Saxony: 7.14 percent (3.57 percent)

Saxony-Anhalt: 7.14 percent (3.57 percent)

Schleswig-Holstein: 7.14 percent (3.57 percent)

Thuringia: 7.14 percent (3.57 percent)

If it’s hard to gauge how much this means in real terms, we can take the example of two properties: a €200,000 apartment and a €500,000 family home.

In the state of Hesse, a buyer splitting the broker’s fee equally with the seller would pay €5,940 to buy the €200,000 apartment and €14,850 to buy the €500,000 house.

In pricier Berlin, meanwhile, the same buyer would pay €7,140 on the €200,000 apartment and €17,850 on the €500,000 house.

READ ALSO: Is autumn 2024 the right time to buy a property in Germany?

Here’s where it gets more complicated, however: under German law, you are technically free to negotiate the commission with your estate agent.

That means that, especially in areas with stiff competition, you may be able to secure a better deal. 

Do I always have to pay commission in Germany? 

Not always. In fact, as a seller, you’re perfectly free to sell your property privately without enlisting the help of a real estate agent.

The benefit of this, of course, is that you can potentially save thousands of euros in fees, both for yourself and any prospective buyer. 

On the flip side, though, you will need to take the entire job of the estate agent on yourself, from marketing the property to liaising with potential buyers and finally closing the deal.

Real estate agent Germany

A real estate agent talks to prospective tenants at an apartment viewing. Photo: picture alliance/dpa | Tobias Hase

There can also be some upfront costs involved in commissioning things like floor plans and professional photography, as well as the time you’ll need to invest in learning all the procedures and preparing relevant documents for notary – to name just a few examples.

Ultimately, though, it’s up to you to decide whether the expense of working with a professional broker is worth it in the end. 

As a buyer, there are also some situations where you’ll see the words ‘provisionsfrei’ – or commission-free – written in a property listing.

This is fairly common in new-build properties, where the developer may sell the homes directly to interested buyers. More rarely, an existing property may be listed without commission, making it a more attractive proposition.

In both cases, it’s possible that commission has been built into the purchase price, so you may not necessarily be getting a better deal.

Another case where you’re likely to be able to avoid commission as a buyer are so-called Kapitalanlagen – or buy-to-let properties. 

READ ALSO: Should you think about purchasing a buy-to-let property in Germany?

These tenanted properties are designed to be bought as investments: buyers can enjoy additional rental income over time and, ideally, will also make money when they come to sell the property several years later.

For this reason, costs are generally kept slightly lower for the buyer by eschewing the standard broker’s commission. 

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