Why are UK house prices so much higher than in Germany?

drc

chucky wrote: »

why is the grass always greener on the other side by the people that think that the capital city of Germany is Berlin...

Probably because Berlin IS the capital of Germany. It used to be Bonn but not for several years now.

http://en.wikipedia.org/wiki/Berlin

toby3000

HAMISH_MCTAVISH wrote: »

Primarily because of German population decline versus UK population increase.

The price differential is particularly large in the areas of what was formerly East Germany.

Where you can find flats for 17K euros all day long. But there is no employment to support anyone living there.

So 1.7 million people have left..... Hence the cheap houses.

http://knowledge.allianz.com/en/globalissues/demographic_profiles/germany/germany_demographic_profile.html

The UK's population is projected to increase to 70 million by 2030, and 80 million by 2050, from around 61 million today, and just 56 million a couple of decades ago.

There isn't an overall decline in population though. In fact, the exodus from the East should (following your logic) have pushed house prices sky-highwards in the West, which they haven't (as far as I'm aware). Frankfurt isn't exactly an economic backwater;

http://www.findaproperty.com/displayprop.aspx?edid=09&salerent=0&pid=3849836

Partly it's because renting is more attractive and isn't seen as inferior. Partly it's because Germans tend to be debt-adverse. Partly it's expectations - my grandmother sold her house for roughly what she'd paid for it 10 years before. This didn't strike her as odd.

I think it's much harder to set yourself up a landlord. Also if German's are going to buy a second home or rental property they're more likely to buy something in Spain/the Med.

1984ReturnsForReal_2

toby3000 wrote: »

There isn't an overall decline in population though.

I was going to argue that with Hamish but the only info I found said there was a decline across the board but higher in the East.

IveSeenTheLight

GDB2222 wrote: »

Many Germans do rent, that is true. Also, there are rent controls in place, making BTL rather unattractive. Overall, it works rather well at preventing huge amounts of capital being sucked into property.

Interesting, if home ownership is not sought after and BTL is unnattractive, who provides the rental properties?

GDB2222

Degenerate wrote: »

That's a highly debatable point. Larger, yes, but they are a larger country with a larger population. They also export much more, as is often discussed, but the doesn't make their economy "better", rather it highlights the weakness of their own consumption.

Ah, so there I was thinking it's a good idea if domestic consumption is less than production. But in fact, the more we borrow for day-to-day consumption, the stronger our economy is? Shockingly stupid of me not to see this before.

ash28

HAMISH_MCTAVISH wrote: »

Primarily because of German population decline versus UK population increase.

The price differential is particularly large in the areas of what was formerly East Germany.

Where you can find flats for 17K euros all day long. But there is no employment to support anyone living there.

So 1.7 million people have left..... Hence the cheap houses.

http://knowledge.allianz.com/en/globalissues/demographic_profiles/germany/germany_demographic_profile.html

The UK's population is projected to increase to 70 million by 2030, and 80 million by 2050, from around 61 million today, and just 56 million a couple of decades ago.

It's not got a lot to do with the falling population imho, you forgot to mention the post reunification housing boom and it's consequences - prices rocketed. Prices didn't stagnate in Germany for no apparent reason - a couple of big reasons were/are:

In 1991, a law meant to help revive the economy of the former East Germany, the Fördergebietsgesetz, came into being. It offered massive tax incentives to property investors. Anyone who renovated or built property in the East or Berlin, could write off the entire cost of the investment from their taxable income over 10 years.

People fell over themselves to get a bit of this - they poured their money into residential and commercial property renovation/building.

Between 1990 and 1998, the year the tax incentives ended - the price of buy to let properties had risen by about 70%.

People could renovate a property and couldn't lose, they could write off the whole cost against their tax bill. After 1998 the tax incentives no longer existed and there was a glut of properties both renovated and new on the market. People hadn't factored in the demand or lack of it for all of these properties.

I guess Germany had the housing bubble first - I can remember when the price of a typical German house cost 3x the cost of one here. Southern Germany that is.

Germany went into recession in 2001 with record unemployment - the Dax fell through the floor in 2000 when the dotcom bubble burst, we got off very lightly in the UK, and where in a lot of countries people might have turned to property as a safe bet - in Germany that didn't happen - too many people had been made bankrupt during the boom. People had renovated or built 4 or 5 properties - refinanced and refinanced to do them and then when the rents didn't come in - they were finished. A lot of fingers got burnt in Germany one way and another during the late 1990s early 2000s.

HAMISH_MCTAVISH

toby3000 wrote: »

There isn't an overall decline in population though. .

Yes there is.

Total population is declining, and has been for the last 7 years. And that's after several million immigrants.

Current rate of decline is around 0.5% per year.... Roughly 400,000 less people in Germany, each and every year.

In a decade, they'll be giving away houses in the east free with a box of cereal, like Detroit is now.

In two decades there will be just 2 working age people for every retiree.

The future for Germany looks very grim indeed.

ash28

IveSeenTheLight wrote: »

Interesting, if home ownership is not sought after and BTL is unnattractive, who provides the rental properties?

Large corporations and pension funds own a lot of property in Germany - as do quite a lot private citizens. A lot of property in the East is/was state owned.

There is quite a hefty tax incentive on BTL, but none for home ownership. It's not unusual for someone to live in a rented home but own a BTL.

toby3000

1984ReturnsForReal wrote: »

I was going to argue that with Hamish but the only info I found said there was a decline across the board but higher in the East.

I did have problems finding stats on the the overall population, but I found it at 79.4 million in 1990, 82.8 in 2000 and 82.3 million 2010.

http://www.tacitus.nu/historical-atlas/population/germany.htm

http://en.wikipedia.org/wiki/Demographics_of_Germany

I dunno how realible they are. I'd always been under the impression that while the 'German' population of Germany would have crashed it was being held roughly steady through immigrantion. Either way, the majority of the population that left the East will have gone to the West.

The same could be said about regions of the UK - the population of Newcastle has fallen by 70,000 since 1951 but there has been no correspounding fall in houses prices.

1984ReturnsForReal_2

toby3000 wrote: »

I did have problems finding stats on the the overall population, but I found it at 79.4 million in 1990, 82.8 in 2000 and 82.3 million 2010.

http://www.tacitus.nu/historical-atlas/population/germany.htm

http://en.wikipedia.org/wiki/Demographics_of_Germany

I dunno how realible they are. I'd always been under the impression that while the 'German' population of Germany would have crashed it was being held roughly steady through immigrantion. Either way, the majority of the population that left the East will have gone to the West.

The same could be said about regions of the UK - the population of Newcastle has fallen by 70,000 since 1951 but there has been no correspounding fall in houses prices.

https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html


CIA Factbook minus 0.053%