Dreaming of a home: The regional divide in housing affordability

The rise in total upfront cash requirement has become the main obstacle to homeownership in Germany. Between 2015 and 2024, the average household needed a median of 9.37 years to save the necessary funds for a home purchase. • A substantial share of this burden comes not from the price itself, but from the closing costs incurred at purchase. For the real estate transfer tax and notary and land registry fees alone, the median saving time amounts to 1.46 years. • Regional inequality is considerable: the time needed to save for the total upfront cash requirement varies sharply across districts and exceeds 20 years in Munich and its surrounding area, as well as in other particularly expensive growth regions. • A comparison shows that high overall burdens primarily reflect high prices. In the case of closing costs, however, additional differences arise from the variation in real estate transfer tax rates across the German states. • This entry barrier hits those who lack wealth and family support especially hard. Access to homeownership, and thus also the opportunity to build wealth, is unevenly distributed across regions. • If policymakers want to broaden access to homeownership, they should focus in particular on one-off closing costs. This is a policy lever that can be influenced more readily in the short run than the price level itself.