Renting vs buying — The real math for median earners
A €350,000 flat costs €35,245 before the first mortgage payment leaves your account. That entry ticket, not the rent, sets how long you have to stay.
A €350,000 flat costs €35,245 before the first mortgage payment leaves your account. Property transfer tax, the notary, the land registry and the agent's half are paid in cash at closing, they buy no square metres of anything, and they are the reason the American rule about breaking even after five years does not survive the trip to Germany.
So there are two tests, not one. The first asks whether you can put €105,245 on the table without wrecking everything else. The second asks whether you will still be in the same city by the time the transaction costs have been absorbed. Buying fails the first test for most median earners and fails the second for anyone who moves. Renting fails neither, and builds no equity while it waits.
One more asymmetry is worth knowing before you sign. A percentage point on the mortgage rate is €2,800 in interest in the first year on a €280,000 loan, which is more than most buyers' entire renovation budget. The rate affects your monthly cash flow immediately and permanently; the purchase price is a one-off negotiation.
When renting and investing stops working
The rent-and-invest arithmetic collapses the moment the investing stops. The renter's line in the chart exists because €507 hits a depot every month for ten years. A household that rents for €1,100, spends the difference and has nothing invested in 2036 is not running this model at all; it is simply renting, with less to show for it than the owner.
It is also the wrong advice for anyone who will move within five years, for anyone who would drain the emergency fund for the down payment, and for anyone who would finance the Kaufnebenkosten. It is wrong for a single-industry town with falling population, where the local employer is also the local property market.
And it is wrong for the buyer who is buying a use value rather than a return. If the point is a fixed housing cost in retirement, a flat you can adapt to your own body as you age, and the end of asking permission to hang a shelf, that is a legitimate purchase. Just price it honestly instead of calling it an investment.
If you buy anyway, the order that works
Fix the location before the flat
Jobs, population and infrastructure decide the ten-year number. The floor plan does not.
Keep the full costs in cash
20% down plus the Kaufnebenkosten from savings. Most banks want the costs paid from your own funds, and financing them costs €57,700 over thirty years.
Fix the rate for at least ten years
The break-even sits in the second half of the first decade. A five-year Zinsbindung puts the refinancing risk exactly where you cannot carry it.
Fund the reserve monthly, not in emergencies
The Instandhaltungsrücklage is the roof fund. Owners who skip it borrow at the worst possible moment.
Keep the depot running
The flat is a place to live that may also appreciate. Thirty years of missed contributions is a certain cost against an uncertain gain.
Nobody is throwing money away by renting, and nobody is building wealth automatically by buying. The German version of the ownership argument is settled by a number most buyers never add up: €47,740 to get in and back out again. Beat that number with a long stay and real local demand, or admit that you are paying it for something other than a return.
The first 10% buys nothing
| Cost | Rate | On €350,000 |
|---|---|---|
| Grunderwerbsteuer | 3.5% in Bavaria, 6.5% in North Rhine-Westphalia | €12,250 to €22,750 |
| Notar and Grundbuch (notary and land registry) | roughly 1.5% | €5,250 |
| Agent's half, under the Bestellerprinzip | roughly 3.57% | €12,495 |
| Total at the 5% rate | 10.1% | €35,245 |
- Grunderwerbsteuer50%€17,500 of the total, at the 5% rate
- Notar and Grundbuch15%€5,250
- Agent, buyer's half35%€12,495
| Grunderwerbsteuer | 50% |
|---|---|
| Notar and Grundbuch | 15% |
| Agent, buyer's half | 35% |
The tax alone is half of it, and the rate is set by the state you buy in rather than by anything about the property.
Illustrative. €350,000 purchase price, buyer's share of the agent's fee under the Bestellerprinzip.
On top of the €35,245 you need €70,000 to reach the 20% down payment that keeps a mortgage cheap. That is €105,245 in cash before you own anything. At a median household income of roughly €3,000 net a month, saving that while paying €1,100 in rent takes most of a decade, which is exactly the period in which people move, change jobs and have children.
There is a second cost waiting at the other end. Selling through an agent costs roughly another 3.57% of the price, so a buy-and-sell round trip runs to about 13.6% of the purchase price. On this flat, €47,740. That is what you have lost on the day you sign, measured against an identical household that kept the cash.
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