The mindblowing housing market inflation in Germany and the fear of missing out

How the pandemic brings people to their financial limits in fear of missing out

The pandemic brought many changes to our daily lives, whether wearing masks in the supermarket, keeping a 1,5m distance from other people, or working from home. As the advantages of living in the city diminished, with restaurants, bars, and public locations closing down, people went looking for their patch of land to regain the freedom lost during the lockdown. And as of spring 2021, it seems people are willing to pay close to anything. An average house in a radius of 30km around Hamburg (that’s 140qm (1500 square feet)) sets you back around $920,000. Prices in the city go into the millions, with an average house costing $3.2 million. So let’s only take a look at the housing market around Hamburg. Compared to one year ago, the price tag of $920,000 means an increase of $100,000. Take it this way: a house in the current market is gaining close to $300 in value every day. That’s $12.5 per hour. Your home could be earning a higher hourly income than you, 24/7! Going back ten years, the same average house was only evaluated at around $540,000, resulting in an average of $38k value increase per year.

The costs

The average household income in Hamburg is around $75,000. After taxes, that leaves $4,300 per month. Buying the average house for $920,000 brings additional fees and costs with it (taxes, broker), let’s say 10% (this can vary and be higher). So the house price goes to ~$1 million. Say, the average family buying a house is 35 years old and has another 32 years of working left. Ideally, your house should be paid off before you retire. Even though the bank loan interest is low, you will be paying back roughly $200.000 in interest, bringing the costs to $1.2 million (over the 32 years).

The calculation

Let’s calculate the monthly rate for your housing project. Paying back 384 months (until retirement), the price tag of $1.2 million will cost you on average $3,125 per month. With the additional costs for a house of around $500 (taxes, heating, electricity, etc.), your monthly payment goes up to $3,625 per month. For the rest of your working life! With an income of $4,300, that leaves you and your family with $675 to live. That’s $20 per day and in no way doable or recommendable.

The higher-earners

Let’s take the average salary of a full-time job with a university degree of $57k and assume that both partners are working full-time—your household income increases to $114k per year. After taxes, you will take home $5.5k per month, leaving you with $1,875 to live by every month. As the house is now outside of Hamburg, and the salary is only the average for city workers, you will need at least one car for transit into the city, costing you another $500 per month in taxes, keep-up costs, and fuel (assuming you already own a car). That leaves $1.3k for food, clothing, repairs, kids, and savings. According to city records, the average cost of living in Hamburg is $1.4k (for two people). So even without kids, you are already exceeding your budget for an average standard of living. For a family of 4, the average cost of living exceeds $2k and makes your housing a luxury rather than a living good.

Even though the calculation above shows that it is not good to buy a house with an average two full-time job household, you might calculate more optimistically and get your calculation to sound plausible and work out. But are you sure that both of you will keep working until retirement? What if one of you loses their job? Or decides to become a stay-at-home parent for a few years? With all those outcomes, you will most likely fall back on savings. Once those are used up, you will lose your house and go back to renting.

Who can afford the average house?

Let’s assume the average family wants to become a family of 4 eventually. So, the costs sum up to: housing ($3,6k), cost of living ($2,2k), and some savings ($400) results in a yearly income of $75k before and $130k after taxes. Let’s assume one person is only working part-time (due to kids); the salaries would be split $86k (full-time) and $43k (part-time). With those salaries, you are counting to the top 6% earners of the country!


We found out that the best 6% of earners can only purchase the average house in a radius of 30km around Hamburg in Germany. So how come that, for every house on offer since mid-2020, an average of 200 people showed interest, and six bids were made after the tour (average values from immscout24)? This is how housing and banking bubbles are created.

Mobile application developer and health enthusiast from Hamburg

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