A Rocky Path to Homeownership: Why Germany Eliminated Large-Scale Subsidies for Homeowners

Alexander Reisenbichler
George Washington University

Foreign Exchange

Foreign Exchange, a department of Cityscape, reports on what the U.S. Department of Housing and Urban Development’s Office for International and Philanthropic Innovation has learned about new departures in housing and development policy in cities and suburbs throughout the world that might have value if applied in U.S. communities. If you have a recent research report or article of fewer than 2,000 words to share in a forthcoming issue of Cityscape, please send a one-paragraph abstract to matthew.l.hennessy@hud.gov.

For most Germans, renting a home is nothing unusual. Germany has developed an affordable, well-functioning rental market and a longstanding reputation as a nation of renters. The rate of homeownership has remained correspondingly low (43 percent in 2013) when compared with the rate in the United States (65 percent in 2013). The story often told is that generous housing subsidies for the rental market and the absence of homeownership subsidies helped produce such an outcome (Voigtländer, 2009). Contrary to this popular belief, however, homeowners in Germany did receive sizable tax breaks and subsidies as part of social housing programs from the 1950s until the first decade of the 21st century. For decades, policymakers across the political spectrum have tried to create a nation of homeowners—but have struggled to do so.