RESIDENTIAL PROPERTY IN GERMANY:
MORE AFFORDABLE THAN EVER
In 2017, residential property in Germany was more affordable by 40 % than back in 1980.
Why is that?
Residential property in Germany was more affordable by 40.2 % in 2017 compared to 1980.
- 40.2 %
Price to income ratio 1980 2017
The price to income ratio (= comparison of the nominal house price to the nominal disposable income per head) in Germany was lower by 40.2 % in 2017 compared to 1980. This shows, residential property has become more affordable in Germany over time.
Price income ratio
nominal house price
household disposable income
The price to income ratio can be considered as a measure of affordability. The lower this figure, the more affordable the residential property.
The household disposable income was higher by 90.4 % in 2016 compared to 1995. The nominal house price has increased only by 21.3 % within the same time span. This shows in a price income ratio decrease of 18.9 %. This means, residential property has become more affordable by 18.9 %.
HOW IS THE SITUATION COMPARED TO OTHER COUNTRIES?
(Data on Germany serves as a 100 % basis for illustrations.)
UNITED KINGDOM (UK)
UNITED STATES (US)
- 32 %
Residential property in Japan was more affordable by 32 % in 2016 compared to 1995.
household disposable income (gross adjusted, US dollars/capita): Real household net disposable income is defined as the sum of household final consumption expenditure and savings, minus the change in net equity of households in pension funds. This indicator also corresponds to the sum of wages and salaries, mixed income, net property income, net current transfers and social benefits other than social transfers in kind, less taxes on income and wealth and social security contributions paid by employees, the self-employed and the unemployed. Household gross adjusted disposable income additionally reallocates "income" from government and non-profit institutions serving households (NPISHs) to households to reflect social transfers in kind. These transfers reflect expenditures made by government or NPISHs on individual goods and services, such as health and education, on behalf of an individual household. The indicator includes the disposable income of non-profit institutions serving households. Disposable income, as a concept, is closer to the idea of income as generally understood in economics, than is either national income or gross domestic product (GDP). This indicator is measured in terms of net in annual growth rates and in terms of gross adjusted in USD per capita at current prices and PPPs. All OECD countries compile their data according to the 2008 System of National Accounts (SNA).
nominal house price: In most cases, the nominal house price covers the sale of newly-built and existing dwellings, following the recommendations from RPPI (Residential Property Prices Indices) manual.
Price to income ratio: The price to income ratio is the nominal house price divided by the nominal disposable income per head and can be considered as a measure of affordability. The lower this figure, the more affordable the residential property.
DATA SOURCE: OECD (2018), Housing prices (indicator). doi: 10.1787/63008438-en (Accessed on 21 September 2018).
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