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Steadily falling interest rates and moderate price increases for single-family homes has resulted in a new high in the affordability index for single-family homes in Germany. Research by the Center for Real Estate Studies (CRES), found that while prices of an average family home with medium residential value have increased by 2.8%, but the affordability index has risen by 15 points due to historically low interest rates which have fallen by 27% within the past year from 3.98% to 2.91%. CRES conducted its research on behalf of the real estate association IVD.

The index factors home prices, interest rates and disposable income together for a key figure and provides information on the extent it is financially feasible for the average household to purchase a property. The index rose to 130 points; an all-time high. 

While the national average for affordability has increased, key, large market areas are also seeing an increase. Home ownership in Berlin, Hamburg and Munich is more affordable than a year ago, despite the sometimes sharply increased prices. 

Munich remains the least affordable city, according to the index, with a value of 54.94 points; although detached, single-family homes are more affordable now than a year ago when Munich recorded 53.73 points on the index. The city with the highest affordability is, as last year, Dresden, with a value of 131.79 points, up from 120.4 in 2011, followed by East Berlin, with a value of 125.47 points (114.48 points last year). 

Rural areas represent the most affordable places to purchase a home given the falling prices resulting from demographic changes.

For 2013, IVD expects to see a sideways move in the affordability of housing. Prices will rise next year only moderately and then stabilize. There is no expectation of major movement in interest rates, so a slight increase in net income affordability should remain constant.