Dreaming of a Home: The Regional Divide in Housing Affordability

Access to homeownership is highly uneven across regions in Germany. Using data for all German districts, we show how many years households needed to save between 2015 and 2024 to accumulate the required equity to enter homeownership, distinguishing between total required equity and transaction costs. The results show that high saving hurdles are concentrated mainly in expensive growth regions and thus largely reflect high price levels. At the same time, saving time for transaction costs follows a distinct regional pattern that cannot be explained by house prices alone, but is also shaped by differences in state-level real estate transfer tax rates. Regional barriers to homeownership are therefore driven not only by market conditions, but also in part by transaction costs that are shaped by policy.

Kiel Institute Experts