Home affordability: Buyers can now afford up to 24% more house
A new law regulates the payment of the broker's commission in a new way. This affects how much house buyers can afford.Updated on 11 December 2024
A new law that takes effect on Dec. 23 will change who pays the real estate agent commission. In states like Berlin and Brandenburg, sellers don't currently pay a dime when selling their real estate through a broker, and buyers pay the full 7.14%.
Going forward, buyers will pay a maximum of 50%, or 3.57%. The same holds true in Bremen, Hamburg, and Hesse, although the fees are relatively smaller.
We have surveyed over 575 potential buyers to find out what they think will happen. Here are the results:
Almost half (47%) of actively looking buyers think that they can now afford more house. Right now, they have limited savings. Their income is good, but in Germany, homebuyers need an enormous amount of savings to buy their first home and pay the sizable purchase fees.
The new law means that fees go down for buyers, and hence, they would need fewer savings. As a result, half of the potential buyers think they will be able to afford a larger or more expensive house. And the buyers are right. Even those with larger savings and who aim for favorable interest rates will benefit.
Nonetheless, more than half (55%) of the buyers think they will not gain directly from the reduced fees. They expect sellers to offset their cost increase with a higher purchase price and that buyers will not benefit from reduced costs.
Buyers want to see real deep cuts in the overall real estate fees.Over half of the respondents think the fees should be capped at 2%, and another 20% think that 3% is high enough. Just a mere 5% of respondents would like to keep the current national maximum (7.14% when VAT is 19%).
Buyers can look at some other countries with envy, where real estate agent fees are indeed much lower.Real estate agent fees in efficient markets like the UK and the Netherlands are 1.42% resp 1.38% on average, including VAT. This amounts to about ⅕ of the maximum fees in Germany. Germany is more or less at the top (or should we call it the bottom) when it comes to real estate agent fees.
German homeowners could potentially benefit massively from examining the practices in high-efficiency countries. The overall economy, as well as lower fees, means more mobility and flexibility for people to move around the country. Moreover, higher homeownership could help people save for old age and reduce poverty among older people, who face ever-increasing rent payments and pensions that do not keep up.
