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A high financial burden for German home buyers

Home buyers in Germany not only have to pay high down payments for financing their property, but they also have to pay high transaction costs. Besides the transaction tax, also notary fees and the entry in the land register sum up to a considerable amount. The cases of the Netherlands and the United Kingdom illustrate that high transaction costs are not a necessity.Prices in the German housing market are soaring, especially in the big cities. In Berlin, Munich and Hamburg, prices have increased by some 50 percent since 2010. Nevertheless, buying is more favourable than renting in the current situation. Based on the “user cost of housing” approach developed by Poterba (1984), Seipelt and Voigtländer (2016) calculate that buyers save up...[…]