Getting a Better Rate of Return than from Other Investments
Compared to financial investments like government bonds, life insurance policies or classic savings accounts, investing in residential real estate will give you a much higher rate of return. Virtually all conservative investment formats have ceased to yield more than negligible returns – and there is nothing to suggest that this cycle will end any time soon. It contrasts starkly with the permanently stable appreciation of residential real estate: You will be making a dedicated effort to build up wealth and secure your retirement.
An Inflation-Safe Investment
Residential real estate is an investment considered extremely stable in value and low in risk. Properties are impervious to currency-, crisis- and inflation-related threats. In 2015, Germany's inflation rate equalled 0.3 percent. Although this may be a modest loss, it does imply that your money lost in purchasing power. Meanwhile, your investment property gained steadily in value. If nothing else, it is reflected in recent rent growth.
Providing for Your Retirement
If you acquire property for owner-occupancy, your housing costs will drop to a negligible amount once you repaid your loan. Alternatively, you could let your property and realise a handsome rate of return that is tantamount to a second income. The same goes for buy-to-let investments: Since the prospects of an adequate government pension seem increasingly bleak, you would bolster your retirement scheme by securing a second, stable income from rent revenues.
Save Yourself the Trouble of Rent and Rent Hikes
In the long run, buying property tends to be substantially more affordable than renting. This is the upshot of a survey that the IW Economic Institute compiled in 2015 after having studied all counties and corporate cities in Germany. It found that the costs involved in buying property undercut the rental costs for a comparable home by up to 51 percent.
The main reason to explain this is the persistently low interest on real estate loans: Making the dream of a home of one's own come true is now more affordable than at almost any other time, and the monthly rates to the bank will remain predictable for a long time. Simultaneously, rents are going up everywhere. To protect yourself against future rent increases and to make housing costs easier to predict, more and more people in Germany opt for homeownership.
(Source: online edition of Handelsblatt on 11/03/2015)
Living within Your Own Four Walls
Many people derive great comfort and contentment from living in a home of their own. You, too, would no longer have to worry about a landlord and rent reviews, or need anyone's permission to make structural changes inside your home. In addition, it is good to know that you made a sound decision that put your money to work. There is virtually no other investment nowadays quite as profitable and sound as real property.
“Anyone repaying a 200,000 euro loan ten years ago with monthly rates of 1,000 euros can do the same on just 600 euros a month today. People who would not have dreamt of it a short while ago can now afford to buy a condominium. Rents, by contrast, have generally gone up in the meantime, which makes the whole thing even more attractive.”
(Source: Die Welt, “Der grosse Immobilienrausch,” on 25/03/2012, welt.de)