Home ownership much harder to finance than ten years ago

Rising real estate prices and higher interest rates are putting pressure on affordability - what this means for buyers and sellers
Reading time: approx. 6-7 minutes - Status: August 2025

Summary

• An analysis by asset manager Flossbach von Storch shows: The affordability of home ownership has deteriorated noticeably compared to 2015.
• Reasons: sharp rise in purchase prices in the 2010s and significantly higher mortgage interest rates since 2022 (currently often around 3.5-4.0%).
• Example (average purchase price € 350,000, 86 % financing, budget € 1,900 incl. energy/maintenance): The repayment period for loans has almost doubled.
• It remains to be seen whether falling interest rates will compensate for this - inflation expectations and yields on long-term German government bonds remain decisive.

What does Flossbach von Storch measure?

FvS has been calculating an affordability indicator for residential real estate since 2003. Input variables:

• Nominal income development
• Real estate prices
• Mortgage interest rates
• Energy and maintenance costs

The core measure is the course of the repayment period: how many years an average household needs to pay off the debt on a typical property - based on realistic assumptions regarding equity, interest, ancillary costs and household budget.

What has changed since the 2010s?

In the 2010s, very low interest rates compensated for rising purchase prices - housing remained affordable. Since the rise in interest rates in 2022/23, the relationship has changed:

• Purchase prices remain high in many places (with regional corrections),
• interest rates are well above the zero interest rate phase,
• Energy