The shattered dream of owning a home in Germany
Owning a home in Germany: Reza Mehman and his guest discuss whether home ownership really is the middle class’s biggest financial mistake, and why the dream of a house of your own is becoming harder to achieve.
The original episode is in German. This is the complete English translation of the article and edited transcript. Financial assessments and historical comparisons reflect the speakers’ discussion at the time; they are not individual investment advice. Speaker labels follow the original edited transcript.
Owning a home in Germany: buy or rent?
Owning a home in Germany was, for decades, the epitome of security, belonging and financial success. Yet more and more people can no longer afford that dream. In this podcast episode, Reza Mehman and his guest discuss whether a home really is the middle class’s biggest financial mistake, as financial author Gerd Kommer argues, or whether it is more than just an investment. They examine why property in urban centres such as Heidelberg, Munich and Hamburg is barely affordable for people on average incomes, the role inheritance plays, and whether houses really are more expensive today than in the 1980s.
Summary
One-sentence version: Reza Mehman and his guest discuss why the dream of owning a home in Germany is falling apart for many people, and whether buying really is better than renting.
Three-sentence version: Home ownership is seen in Germany as a symbol of security and success, but financial author Gerd Kommer calls it the “middle class’s biggest financial mistake”. Reza and his guest examine why property in urban centres is barely affordable for people on average incomes, and what role inheritance plays. Surprisingly, the episode cites studies suggesting that, by economic measures, homes today are often more affordable than in the 1980s.
Five-sentence version: Owning a home in Germany was seen for decades as the epitome of security and belonging, but today that dream is falling apart for more and more people. Reza Mehman and his guest discuss financial author Gerd Kommer’s claim that a home is the “middle class’s biggest financial mistake”, because investing the capital in ETFs could produce higher long-term returns. Reza counters that a home forces you to save, provides emotional security and is more than a pure investment. Property in urban centres such as Heidelberg, Munich and Hamburg is barely affordable for people on average incomes, while rural areas are substantially cheaper. Surprisingly, the episode cites studies suggesting that homes are often more affordable today than in the 1980s when measured by the relationship between income and mortgage payments.
Context: who, what and why
Who is speaking: Reza Mehman is a podcaster and property owner from Heidelberg. His guest is a regular conversation partner who brings another perspective to the subjects they discuss.
What it is about: The debate about owning versus renting a home in Germany. Is a home really the middle class’s biggest financial mistake, or is it more than an investment?
Why it matters: German property prices, especially in urban centres, have risen sharply in recent years. More and more people cannot afford to own a home, while inheritance further widens the gap between rich and poor.
Three key questions in this episode:
- Is a home really the middle class’s biggest financial mistake?
- Why is property in urban centres barely affordable for people on average incomes?
- Are homes really more expensive today than in the 1980s?
Contents
- Introduction — An overview of Germany’s home ownership debate
- Summary — A concise summary in three versions
- Context — Who is speaking, what it is about and why it matters
- Topics and context — The economic and social themes
- Key points — The episode’s main arguments at a glance
- Frequently asked questions — Answers to the main questions
- Highlighted quotes — Standout statements from the episode
- The complete conversation — The edited podcast transcript
- Keywords — Relevant search terms
- Names and terms — Important people and terms in the episode
- Passage for quotation — A ready-to-use text
Topics and context
1. A home’s emotional value versus a financial investment
A home provides security, belonging and comfort. That is more than a simple investment calculation.
Keywords: home ownership, security, belonging, emotional value
2. Gerd Kommer’s argument: the middle class’s biggest mistake
Financial author Gerd Kommer argues that capital invested in ETFs produces higher long-term returns than an owner-occupied home.
Keywords: Gerd Kommer, ETFs, opportunity costs, middle class
3. Property prices in urban centres
In Heidelberg, Munich, Hamburg and Berlin, property is barely affordable for people on average incomes. Rural regions are substantially cheaper.
Keywords: property prices, urban centres, Heidelberg, Munich, average earners
4. Inheritance and a widening gap
People whose parents own a home may not need to worry about home ownership themselves. The gap between rich and poor widens further.
Keywords: inheritance, wealth gap, inherited property, social inequality
5. Affordability today versus 1980
The episode cites the surprising conclusion of studies that, by economic measures, homes are often more affordable today than in the 1980s.
Keywords: housing affordability, comparison with 1980, income-to-payment ratio, mortgage burden
Key points from the episode
- Owning a home in Germany is seen as a symbol of security, belonging and success: more than a pure investment.
- Financial author Gerd Kommer calls it the “middle class’s biggest financial mistake”.
- Reza counters that a home forces you to save: if you do not make the payments, you lose the house.
- In urban centres such as Heidelberg, Munich and Hamburg, property is barely affordable for people on average incomes.
- Without parents who own a home or have capital, many people can barely afford a house themselves.
- Many people do not consider buying a home because they know they will inherit one.
- The gap between rich and poor widens as inheritance becomes more important.
- The episode cites studies suggesting that homes today are often more affordable than in the 1980s by economic measures.
- The speakers cite housing finance costs of 40–50 per cent of income in the past, compared with around 30 per cent today.
- Germany is a nation of renters, with a low home ownership rate compared with other countries.
Frequently asked questions
Is owning a home really the middle class’s biggest financial mistake?
Financial author Gerd Kommer argues that capital invested in ETFs generates higher long-term returns than an owner-occupied home. Reza Mehman counters that a home forces you to save, provides emotional security and is more than a pure investment. The answer depends on personal circumstances, location and how you define “success”.
Why is property in German cities so expensive?
Urban centres such as Heidelberg, Munich, Hamburg and Berlin concentrate many highly qualified people earning good salaries, which drives demand and prices. Rural regions are substantially cheaper. For average earners, even Munich’s commuter belt is barely affordable.
Are homes really more expensive today than in the 1980s?
The episode cites studies suggesting, surprisingly, that German homes are often more affordable today by economic measures than in the 1980s. The figures discussed are 40–50 per cent of income spent on housing finance in the past versus around 30 per cent today. This does not apply to every region: conditions in urban centres are much tighter.
What role does inheritance play in buying property?
More and more people can only afford a home if their parents already own property or have enough capital. Many do not consider buying because they know they will inherit a house. This widens the gap between rich and poor: those without parents who own a home face a structural disadvantage.
Is Germany really a nation of renters?
Yes, Germany has a relatively low home ownership rate by international standards. Nevertheless, owning a home is a life goal for many Germans, symbolising security, belonging and success. The wish for a house of one’s own is deeply rooted in the German mentality, even when reality looks different for many people.
Why does owning a home force you to save?
Reza Mehman argues that owning a home creates an obligation to save: if you do not make the monthly payments, you lose the house. He sees this as a psychological advantage over voluntary savings or ETF investments, which you can simply pause in difficult months. Over the long term, that discipline can build more wealth than undisciplined investing.
Highlighted quotes
“Owning a home is the middle class’s biggest financial mistake.”
— Tagesschau.de, quoted by Reza Mehman
“The idea that buying is automatically always better than renting is a stubborn myth which became the prevailing view over generations and has now hardened into unquestioned dogma.”
— Gerd Kommer, quoted by Reza Mehman
“A home makes sure you have to save. There’s no: oh, I won’t pay my instalment this month. If I don’t pay it, the bank is immediately at the door and the house is gone.”
— Reza Mehman
“I’ll inherit the house from my parents. So I don’t need to worry about it at all.”
— A friend of Reza’s wife, quoted by Reza Mehman
“The gap between poverty and wealth keeps widening.”
— Reza Mehman
“Like a protective cocoon in an uncertain world: you have your own house.”
— Reza Mehman, on a home’s emotional value
The complete conversation
A home: a symbol of security and belonging
Reza Mehman:
Owning a home in Germany. I have quite a definite opinion about it. Recently I read an article online at Tagesschau.de saying that owning a home is the middle class’s biggest financial mistake. I find that statement very interesting, because I think something different was drilled into us Germans. “Work, work, build a little house”, as the Swabian saying goes. But that’s very much Baden-Württemberg. It isn’t typically German, because Germany is a nation of renters. Yes, compared with other countries, that’s true. But I think owning a home is still a goal for many people. Then you’ve somehow made it. You’ve built something that is home to you, somewhere to belong, something that gives you security and comfort. Like a protective cocoon in an uncertain world: you have your own house.
Guest:
That was beautifully put. Understandable, isn’t it?
Reza Mehman:
That was very beautifully put. Now I’m longing for my home too. I can tell you one thing. We came here around 1985, roughly 1985, and naturally we rented for a very, very long time. Back then I had friends whose parents owned homes. It was like you said, which is a lovely description: a protective cocoon. Everything was a little more relaxed there, with lots of space and so on. It left an impression on me. I probably said to myself subconsciously: okay, that’s my goal too. I want an area of my own that belongs to me, and only me. Then I’ll invest a lot in it, look after it, and so on.
Gerd Kommer’s argument: home ownership as a mistake
Reza Mehman:
Now I read that it’s the middle class’s biggest mistake, and another quote: “An owner-occupied home is economic nonsense.” A financial author called Gerd Kommer said that the idea that buying is automatically always better than renting is a stubborn myth which became the prevailing view over generations and has now hardened into unquestioned dogma. The central argument of critics of home ownership is that if all the capital needed to buy a property had been invested in another asset class, such as ETFs, the final wealth would have been greater. And so on. So we’re talking about opportunity costs.
I have a view on that. I think a home makes sure you have to save. There’s no: oh, I won’t pay my instalment this month. If I don’t pay it, the bank is immediately at the door and the house is gone. Saving is a thing in itself. I actually think that if you put all the money into something other than a house, with interest and everything else — after all, you don’t just buy a house for half a million euros, more nowadays, but say half a million — the interest costs alone will probably be almost as much again.
Inheritance and the widening gap
Reza Mehman:
For many people, it has become a real burden. As you said, you often need two earners to have any chance of affording the appropriate living space you want. You made a very important point: in some cases, without parents who perhaps already own a home or have enough capital put aside, it hardly works any more for the next generation to buy a home themselves.
I have a very good example. A few years ago now, I spoke with a friend of my wife’s. We were just having a normal conversation after dinner. I knew she was still renting. I said: what are you doing about property and retirement? Do you have any plans to provide for that? She said: no, why? I said: we’re about the same age; don’t you want to live rent-free at some point, and so on? She said: yes, but I’ll inherit the house from my parents. So I don’t need to worry about it at all.
Honestly, that was an eye-opener for me: many people, as you said — perhaps not the majority, but many — genuinely don’t think about whether to buy a house. Hang on: I’ll inherit one sooner or later anyway.
Personal experiences of inheritance
A good acquaintance of mine recently inherited a house in one of Heidelberg’s best locations. I’m happy for him. We’re talking about a value of one-point-something million, in a truly prime location. It made me realise again that people whose families have lived here for several generations naturally have certain advantages. I’m also pleased that my children may have advantages I didn’t have. I had to acquire my property myself. My impression is that the gap between poverty and wealth keeps widening.
Are homes more affordable today than in 1980?
Reza Mehman:
There’s something else I find very interesting, though. I’d like to ask you a direct question, because it seemed crazy to me when I understood it. Is owning a home more affordable today than, say, in 1980? What do you think? I’ll give you the answer in a moment. It depends on the region.
Guest:
Okay, then let me tell you something. In short, yes, it’s more affordable. In many countries, including Germany, buying a home today is often more affordable than in 1980 by economic measures, taking income, interest costs and living standards into account. But it depends heavily on how you define affordable. Scientific studies show that home ownership in Germany is generally more affordable today than in the 1980s, measured by the relationship between income and monthly payments or mortgage burden. Apparently, people used to spend — I’ve got the figure here somewhere — exactly, 40 to 50 per cent of their income on financing a home. Today it’s around 30 per cent.
Reza Mehman:
Honestly, I find that counterintuitive, because everything today seems incredibly expensive to me. I think we may be focusing too much on cities such as Heidelberg, Munich, Hamburg and Berlin: urban centres where many highly qualified people work, sometimes earning good salaries, sometimes not, and are completely overwhelmed by housing costs. Munich isn’t even an option for someone on an average income, and even Munich’s commuter belt is already difficult for average earners to afford.
Guest:
Differences between urban and rural areas
That’s the point. I’m not so sure it was already like that in the 1980s or 1970s. In rural regions, where the next medium-sized town might be 10 or 20 kilometres away, or even further, house prices, flat prices and rents haven’t developed so dramatically. Life there is more affordable. Presumably these statistics also reflect that development. Obviously it makes a difference if — I’ll use my northern German home region — you live in Flensburg or Schleswig or Flensburg, travelling down the A7 motorway, in those places compared with Hamburg. That’s logical.
Reza Mehman:
Yes, you may well be right. Our region in particular is really crazy. We’re here in Heidelberg, with Walldorf and SAP next door, where they probably pay quite good salaries. BASF is also right next door, and they probably pay good salaries too. So I agree that everything is probably a little more expensive in this commuter belt. That’s why I was so surprised to hear that houses are more affordable today than in 1980. I’m still interested to see how it all develops.
Keywords
Tags: owning a home in Germany, home ownership dream, Gerd Kommer, ETFs versus property, urban property prices, inherited property, middle-class home ownership, Heidelberg property, Munich housing prices, affordability in 1980, Reza Mehman, renting versus buying, forced saving through home ownership
Names and terms
Reza Mehman, Gerd Kommer, Tagesschau, SAP Walldorf, BASF, Heidelberg, Munich, Hamburg, Berlin, Flensburg, Schleswig, commuter belt, ETF, opportunity costs, home ownership rate, International Bill of Human Rights, Germany as a nation of renters
Passage for quotation
Owning a home in Germany was, for decades, a symbol of security, belonging and success: a protective cocoon in an uncertain world.
Financial author Gerd Kommer calls it the “middle class’s biggest financial mistake”, arguing that investing the capital in ETFs would produce higher returns.
Reza Mehman counters that a home forces you to save: if you do not make the payments, you lose the house.
The episode cites the surprising conclusion of studies that homes are often more affordable today than in the 1980s by economic measures.
Yet the gap is widening: those without parents who own a home face a structural disadvantage as inheritance becomes more important.
Episode notes and discussion
Owning a home in Germany: is buying really better than renting? Reza Mehman and his guest discuss whether a home is the middle class’s biggest financial mistake, why property in urban centres is barely affordable for average earners, and the role of inheritance.
Timestamps:
00:00 — A home: a symbol of security and belonging
02:00 — Gerd Kommer’s argument: home ownership as a mistake
05:00 — Inheritance and the widening gap
10:00 — Are homes more affordable today than in 1980?
Find the podcast and listening links.
#RezaMehman #HomeOwnership #Property #Germany #GerdKommer #ETF #MiddleClass #Podcast
Home ownership: a dream or the middle class’s biggest financial mistake?
In my new podcast episode, we discuss:
- Gerd Kommer’s argument that ETFs generate higher returns than an owner-occupied home
- Why owning a home forces you to save
- Why inheritance widens the gap
#Podcast #HomeOwnership #Property #Germany #MiddleClass #RezaMehman
Home ownership: a dream or the biggest financial mistake? In this episode of the Reza Mehman podcast, we discuss why more and more people cannot afford a home, the role of inheritance, and whether houses really are more expensive today than in the 1980s. Explore the podcast and read the complete conversation above.
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