Buying a property in Germany vs investing into MSCI World

[icxc]

@chris1974 I'm from Germany and this doesn't really apply to Germany. The largest cities are not neccesarily the most innovative - most innovation comes from university towns or the seats of large car manufacturers. It's also common to have very small innovative niche companies in rural or suburban areas, Germany as a whole is very spread out.

 

[chris1974]

@icxc What about Berlin? I guess all or most of startups are there?

 

[lightwriter]

@chris1974 Thanks for sharing.

 

[lightwriter]

@resjudicata I agree, that its not risk free, but so is the nature of investing. Regardless of country decrease and WFH culture I would always bet for major cities with growth potential attracting students, business and immigrations (both skilled and unskilled). It’s simply not sustainable that populations are dispersed across remote areas and key reason for the global developed hubs around the globe e.g. London, New York, HK, Tokyo (+30m)

 

[chris1974]

@resjudicata Yeah, it looks like average long term property price increase is the same as inflation, but recent developments in Germany is very different due to some factors (huge demand due to big immigration inflow, low supply due to government regulations, etc). So I am trying to project how long these factors will continue to drive prices even higher....

 

[resjudicata]

@chris1974 The immigration that we experience right now is NOT gonna benefit you, unless you plan on renting out trashy apartments that these immigrants can actually afford.

 

[chris1974]

@resjudicata If not immigration then what was pushing the demand for properties for the last 10 years?

 

[vassoc]

@chris1974 Next to the demand, the low interest rates have pushed many people to invest in real estate because stocks are perceived gambling and real estate is seen as the only alternative to the now longer existing HYSA

 

[chris1974]

@vassoc Good point. Do you think it was mainly retail investors buying properties because of the low interest rates?

 

[vassoc]

@chris1974 I do not have data on the weighting of the factors but it has been a synergetic combination:
- growth of the workforce in the major cities + growth in income in those areas
- low interests/cheap money driving low-risk savers to real estate and more people to borrow more money
- increased demand leading to higher prices of ground and building materials and services

 

[chris1974]

@resjudicata Why not? They are driving the demand, thus prices. And why trashy apartments?

 

[resjudicata]

@chris1974 Because they are not driving demand for a decent apartment cause they can't afford that anyway.

 

[chris1974]

@resjudicata Have you seen some statistics on how much immigrants earn compared to the local population? In my understanding Germany is welcoming high qualified workers with decent salaries (some categories earn even more then local population).

 

[resjudicata]

@chris1974 My god, please don't start with that political correctness now. Open your eyes, the districts that are growing most are not the ones where you would want to raise a family. High potentials are LEAVING Germany, not coming to Germany. That is a known fact - immigration in Germany is comparatively low-qualified and can't be mistaken with how Australia, Canada and the US do it.

You will find plenty of sources if you google with some keywords.

 

[vassoc]

@resjudicata Would you be up to compare your income with those of the immigrants in this subreddit or would it be bad to to start the year with a depression? ;-)

I think the impression you have might be biased by the debates on refugees but also among the refugees my company managed to hire people we are paying six figures

 

[chris1974]

@resjudicata It is not about political correctness, it is about facts. For example, blue card has a requirement of university diploma and 55k yearly income, whereas average german income is only 46k. I am not saying that all immigrants hold a blue card, but it might be not that bad as you describe. And even people who earn less then average german also need a place to live and they will be paying higher rates just to get a property here and live in well developed country.

 

[xianghua]

@resjudicata hi there 🖐
an immigrant here from eastern Europe, we pay 1300€/M kalt for a decent apartment in a smaller city, this is quite the high er 10% in this area. I don’t want to frustrate you but I alone earn well more than four times than the usual German household. Immigrants do not equal the poor refugee people fleeing from war. Cheers

 

[ransomovitch]

@xianghua

Immigrants do not equal the poor refugee people fleeing from war. Cheers

he/she didnt say that. A huge purportion of people who post here are immigrants in Germany like me

 

[resjudicata]

Every single person looking for somewhere to live takes a property or room out of the market. This drives demand for everyone as slightly wealthier renters look for a slightly nicer property to replace the cheaper one taken by an immigrant.

 

[tiredleon]

@chris1974 I think way less people will need to live in cities over the next few decades, especially as remote working and autonomous vehicles improve.