That's only part of the story. Current house prices are so high that only the absolute top of the income class can afford to pay off a mortgage.
Just an example: In Berlin you will pay around 850.000EUR for a newly-built single family home of around 160qm on a 600qm plot. With realistic interest rates of around 1.5 to 1.8% it will take you around 4.8% per year to pay this off in the (roughly) 25 to 30 years you have left of working years if you are a mid-thirties professional. This (conveniently) gives you a factor of 0.004 per month to pay for this house. That's a whopping 3400EUR per month.
Now normally you should not pay more than 33% of your net income for living. That means, such a house is affordable, even with the relatively low interest rates, for families with a net income of 10kEUR per month. How many mid-thirty families have that kind of income?
So what drives these prices is actually inherited wealth. Inherit real estate and you can cut that price easily in half. 1700EUR a month is much more reasonable and that does not even account for the even better interest rates you will see. Notably you just transfer your inherited wealth, you do not lose it.
>So what drives these prices is actually inherited wealth.
This is so true for Germany/Most of Western Europe. Buying property is a pipe dream at this point, even for white collar professionals, if you have no help from the bank of mom and dad.
Building has just not kept up with demand (can't build and dilute the value of established NIMBY property owners) and wages have not kept up with the rising property prices.
And rent freezing for the established ones further increases the cost for those new to the market. So good luck building wealth for a mortgage when you'll be paying over half of your net income for big city rent.
I feel like unless something changes, we're looking at some massive revolts in the next decades if things continue along this path of squeezing the middle and lower classes to further transfer their wealth to the rich, all carefully enabled by the ruling politicians.
That's why so many desperate young ones are gambling their savings on GME and other memes, since they realized that unless you're born into wealth, the game is rigged against you building wealth no matter how hard you work. So then, why bother working hard as that just makes the rich even richer but not you.
Just an example: In Berlin you will pay around 850.000EUR for a newly-built single family home of around 160qm on a 600qm plot. With realistic interest rates of around 1.5 to 1.8% it will take you around 4.8% per year to pay this off in the (roughly) 25 to 30 years you have left of working years if you are a mid-thirties professional. This (conveniently) gives you a factor of 0.004 per month to pay for this house. That's a whopping 3400EUR per month.
Now normally you should not pay more than 33% of your net income for living. That means, such a house is affordable, even with the relatively low interest rates, for families with a net income of 10kEUR per month. How many mid-thirty families have that kind of income?
So what drives these prices is actually inherited wealth. Inherit real estate and you can cut that price easily in half. 1700EUR a month is much more reasonable and that does not even account for the even better interest rates you will see. Notably you just transfer your inherited wealth, you do not lose it.