Affordability trends
In spite of this increase,
affordability, measured in terms of disposable income, has been falling steadily
in recent years. If at the beginning of the current house price cycle an existing
home cost the equivalent of six years’ annual income and a new home required
seven, this now stands at around seven and nine years respectively.
Both figures represent new all-time highs. Therefore, relative to its own history,
residential property in Frankfurt has become very expensive. Measured in terms
of interest expense, the affordability of house prices has increased, however.
Taking the purchase of a 80 square metre non-new build apartment as an
example, with a loan to cover 80% of the purchase excluding transaction costs
and an average market interest rate, the monthly interest expense has dropped
from over EUR 700 in 2009 to currently under EUR 400.
EU Forecast
euf:ba18.c:108/nws-01