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New buildings in Baden-Württemberg: Land of home builders with a high percentage of owners
Photo:
Werner Dieterich / imago images / Westend61
Unlike labor and capital, the supply of land is absolutely limited.
If you own a piece, you can exclude other people from it.
Real estate is also playing an increasingly important role in the increasing inequality in the distribution of income and wealth.
Instead of asking directly about wealth, the question would usually suffice: Do you still rent - or do you already own it?
This is shown by Charlotte Bartels and Carsten Schröder from the German Institute for Economic Research (DIW) in a study commissioned by the Forum for a New Economy initiative, which will be presented in Berlin on Tuesday before the anniversary of German unity.
It is a study that shows enormous differences between East and West even 30 years after reunification.
The proportion of property owners in East Germany has increased from only around 25 percent to around 40 percent since the fall of the Wall.
Compared to Baden-Württemberg, Rhineland-Palatinate or Schleswig-Holstein, that's still not much.
Here the rate is almost 60 percent.
"You need a certain amount of start-up capital and households in eastern Germany tend to have less of this, also because of lower wages," says study author Charlotte Bartels, explaining the resulting wealth inequality.
Overall, between 11 and 16 percent wealth inequality can be traced back to the house you live in - and between 20 and 30 percent to other property ownership.
Because for high earners, owning a home is often long gone.
They are buying more and more apartments in order to rent them out.
And the potential rental income will also exacerbate income inequality.
"Income from renting and leasing is becoming more important," says Bartels about the calculations based on the Socio-Economic Panel, a regularly collected, representative long-term survey.
Whereas in 2002 rental income explained around 20 percent of income inequality after taxes and transfer payments, it was around 30 percent in 2017.
Specifically, landlords take in between 8,000 and 12,000 euros per year.
In view of an average available annual net income of around 28,000 euros per household after taxes and state transfer payments, these sums, which usually benefit those with high incomes, are significant.
Rental income gap remains in East and West
But here, too, there is a gap between East and West.
While more than 16 percent of households in western German states can look forward to rental income, the rate in eastern Germany is only between six and 8.4 percent.
The average rental income is also lower here than in the west - according to the study, "without any noticeable catch-up effect".
For those who have built or bought real estate in East Germany, the following applies: On average, they get away much cheaper than in West Germany - but this is offset by lower values.
If the average real estate assets in Bavaria and Hamburg are on average more than 350,000 euros net, in the east it is only between 100,000 and 150,000 euros.
An apartment in the popular East Berlin district of Prenzlauer Berg, however, will still be worth more than a comparable one in West German Emsland.
In general, around 60 percent of people in rural regions own their own home.
In urban regions and large cities, on the other hand, only 30 to 40 percent of households live in their own four walls, even though the ownership rate has increased significantly here.
Whether in Düsseldorf or Dresden: With a home of your own, which has mostly increased significantly in value over the past few years, you have usually made it to the wealthier half of the population.
Real wealth, however, comes from business assets.
And about two-thirds of that belong to the top one percent of the population.
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30 years of reunification: What unites Germans today - and what still divides themA balance sheet in graphics by Hanz Omar Sayami, Guido Grigat, Frank Kalinowski and Benjamin Bidder
Corporate wealth is the most important factor in the unequal distribution of wealth, a good 50 percent can be attributed to it - real estate only a good third.
After all, the inequality in wealth did not change significantly between 2002 and 2017 thanks to rising house prices, according to the DIW researchers.
Rising rents are a particular burden on the poor
Meanwhile, the poorer half of the population is usually a long way from stocks or real estate.
In metropolitan areas in particular, she also has to spend a large proportion of her income on rent.
Overall, according to the researchers, the rent burden has remained largely stable since 2002, albeit at a high level of more than 25 percent.
The bottom 20 percent, however, spend almost 40 percent of their monthly budget on rent in districts with more than 100,000 inhabitants.
The researchers write that rising rents will therefore hit the poorest the hardest.
It is therefore important to prevent a further increase.
They want to show next summer how something can be changed in the unequal distribution of wealth overall.
Bartels: "That's the next step."
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