Buying an apartment in Germany

Finance, Taxes, Banking, Insurance and Retirement
1
I am considering cashing in my Swiss second pillar to buy an apartment in Germany (Dresden). I am wondering if this is a good move in the light of the current crisis? I had been looking at a couple of places but am not sure how prices will evolve. After the 2008 crisis property prices in Germany began a steady rise but how will things work out this time?

2
I cannot help you out with your question re. economy, but Dresden is a beautiful place, Saxony is amazing! All the best in your adventure!

3
check out for flood risks/history.

4
Plus tenants rights if you rent it out.

5
Really what I am wondering is whether to buy now or wait a few months to see how prices are affected by the corona crisis.

6
There won't be enough transactions to be able to value properly as a normally illiquid market has frozen.

Best guess prices have fallen 15-50%, I completed on a property on 19th March contracts signed late December, so unfortunate timing.

7
so waiting a while is the best option

8
True for the UK, not for Germany, especially in popular cities. Prices have been increasing a lot over the last years because Germany was very affordable compared to income and credit was cheap. Prices are stable but I think we will face a credit crunch - interest rates are low but banks will get a lot more restrictive who they lend to... I’m not sure I’d buy as an investment unless you are going to live in it(?)

Really good investment property is near impossible to find at the end of a ten year boom. I’d look for small flats near popular universities. But I’m not the only one thinking that way...

9
As one of the factors to consider: if you might be renting out, then before you buy, learn about the terms and conditions of agents in the area.

10
it is a place in Dresden to live in myself

11
Again, check flooding history.

12
I don't know why people assume right away that you don't know that area. Do you?

13
yes, I know Dresden quite well as I moved here after prolonged unemployment in CH

14
where did you buy? In Malta or elsewhere?

15
You would be much better buying a house in France or Italy or Spain on the Meditteranean.

16
No idea about prices but apart from the caveats already given: Dresden is a lovely town, I ́d imagine houses will only get more expensive (as they are gettng more expensive in Berlin, where I bought) and interest is still very low (so lock in the interest for a good amount of years!).

Had a look at the prices now in the area where I bought and no difference. But then that may only come later this year, if at all.

17
Hi,

A side topic, but potentially relevant for the OP.

Are you not liable for German tax on the funds you draw down from 2nd pillar to buy a property in Germany?

I am now also a German resident (and working) and was advised so by a Munich tax adviser. After discussions with them, I decided to leave my Swiss 2nd pillar in Switzerland for now. If there is a proven way to use the 2nd pillar funds without being liable for German tax, I would be very interested to get more details.

18
exactly what tax did he say you would have to pay?

19
It greatly depends on what percentage of rent landlords receive. I know commercial property funds that have just received 30% of the second quarter rent. Most people don't have 3 months living costs in the Bank, so plenty of private rents will be missed.

20
Are you sure about German home prices? I think it is too early to say if it will be a price drop due to a severe recession. In theory it will but with trillions of money printed all over the world it may not realise.