Home ownership in Germany has remained at around 45 percent since 2010, but there are changes in who is buying properties.

Fewer young people are buying homes and there's a significant drop in first-time buyers, while older people continue to purchase property, according to a new study by the Institut der deutschen Wirtschaft (IW) in Cologne on behalf of the Bausparkasse Schwäbisch Hall.

The IW found the home ownership rate for 25-34 year olds in Germany has fallen from 17 percent in 2010 to 12 percent in 2017. At the end of the 1990s, that figure was much higher at 23 percent.

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Meanwhile, the home ownership rate has also dropped by five percentage points between 2010 and 2017 in the 35-44 year olds age group.

During the same time frame, the proportion of 65-74 year olds who own their homes rose by two percentage points to 58 percent.

The study also found the number of self-employed people buying homes has gone up, while less civil servants are entering the property market.

Why are some people not buying homes in Germany?

Researchers said the downward trend in some categories could reflect changing demographics in Germany due to increased migration, especially around 2015 during the height of the refugee crisis.

Or it could be down to the fact young people are choosing to study longer and that means they are entering into the job market later in life “which could lead to a later purchase of residential property”, the researchers said.

It's also difficult for people, especially younger generations, to save enough money to get a foot onto the property ladder in the first place.

Banks now demand a higher deposit to secure a mortgage while purchase prices are rising steadily. In some cases, these prices are simply too high for potential homeowners to afford.

Homes in Brandenburg. Photo: DPA

That's shown in the significant drop in first-time buyers. Between 1998 and 2002, the number of first-time buyers was still at a level of around 700,000 households per year in Germany. But in 2016 and 2017, there were fewer than 400,000 households per year – about 1 per cent of all homes.

However, buying a home is an attractive option (if you can save the money beforehand) due to low interest rates. And it could pay.

The household income of those who moved from a rented home to their own property has increased. In 2010, the average net income was €3,000 euros and in 2017 it was just under €4,000. 

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Where do people buy homes in Germany?

In rural parts of Germany, the ownership rate is higher than in urban regions. In 2017, more than half (51.1 percent) of households in rural areas lived in their own home. In the cities, that number was 42.8 per cent.

The highest home ownership rate of all Germany's 16 states in the latest figures from 2017 is in Baden-Württemberg. Just over 54.4 percent of all households live in their own property in the wealthy southern state.

It’s closely followed by Lower Saxony which has a 54 percent rate.

In eastern Germany, the home ownership rate remained below the German average of about 45 percent.

Berlin has by far the lowest home ownership rate with about 18 percent.

In a Europe-wide comparison, Germany ranks second last when it comes to property ownership – Switzerland is the only country where fewer people buy property.