Despite the boom in real estate prices, the value of houses is falling in many regions. Investments often fail to keep pace with inflation.
A property is only worthwhile as an investment if it is located in an attractive region. Whether that is the case with this house in Monchhagen near Rostock is uncertain. Photo: dpa
The real net wealth of private households in Germany fell by 15 percent between 20. This is the conclusion of a study by the German Institute for Economic Research (DIW) in Berlin, which examines the development of wealth taking inflation into account.
According to the study, net wealth per household increased by only 500 euros and 0.4 percent – but because of inflation, this means a loss of real purchasing power by 15 percent. On average, the wealthy have lost around 20,000 euros in ten years – and this despite the fact that German citizens save around 10 percent of their income each year.
According to researchers Markus Grabka and Christian Westermeier, the main reason for this is the weak performance of owner-occupied real estate: "We had a long phase of falling real estate prices between 19. That is instrumental in why we are seeing falling real assets," Grabka explained. The rise in prices only started in recent years and is concentrated in major city regions such as Munich or Berlin. Prices are falling in a number of regions.
Only the rich afford risky investments
Another reason for the decline in assets is the investment behavior of consumers: "Many people prefer to invest their assets in low-risk but low-return investments such as savings accounts, checking accounts or Riester pensions, which often do not even compensate for inflation," says Grabka. People with low incomes in particular often cannot afford to invest in high-risk investments with higher returns.
For this reason, the scientists call for a more targeted promotion of individual asset accumulation. This could also reduce the high level of wealth inequality in Germany. Grabka sees a need for action in the Riester pension, among other things: "The returns on the Riester pension are low and do not arrive where they should. A reform would be necessary here."
Tenants in Germany have particularly few assets: On average, they have net assets of less than 3,000 euros. Separations and divorces also lead to wealth losses, while inheritances, gifts and marriage make people wealthier.
The good news: According to Grabka, real assets could grow again in the future due to the slight increase in real estate values since 2011.