Buying property in Germany as an Australian

Germany – a nation where lush forests, crystal clear rivers and mountains intersect with historical townships and modern metropolises. From chic apartments in Berlin to sleek, modern highrise homes in Frankfurt or traditional cottages in quaint villages throughout, Germany also has no shortage of housing options.

If a move to Germany is something you’re considering and you’re unsure where you stand when it comes to buying property as an Australian, this guide will walk you through what to expect. You could find yourself toasting a beer over your new home sooner than expected, Prost!

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Note: This article is purely for general information purposes and is not to be taken as financial advice. We recommend that you obtain independent financial advice before making any form of decision.

Can Australians buy property or real estate in Germany?

Yes, currently there are no listed restrictions on Australians and other foreigners wishing to buy property in Germany. This is the case regardless of whether you're from an EU or non-EU country.

What is reciprocity when it comes to buying property in different countries

Some countries have what is referred to as Reciprocity or a Reciprocity Agreement for buying property. Aimed at making these exchanges mutually beneficial for citizens of both nations, these agreements typically outline any protections and conditions that apply should they purchase real estate in the other country.

In the case of Australia and Germany, no formal reciprocity agreement exists in terms of property. However, there is an agreement related to taxation that makes provisions to avoid double taxation for residents/citizens of both nations on income and capital gains from property.¹

What’s the property market like in Germany?

With one of the lowest homeownership rates in Western Europe at just under 50%, renting is very common in Germany. While data shows a steady increase in the housing market in the ten years leading up to 2022, more recently this has been in decline.²

This is largely attributed to record-high interest rates which have seen locals preferring to remain renting rather than buy. While this means lesser market competition in some regions currently, this is predicted to change.

Average property prices in different locations

With so many great cities and different regions to choose from, knowing where to start your German property hunt can be a challenge. To help you get started, we’ve gathered details of the average property prices per square metre in various locations to compare.

As more than half of all German households live in apartments, we’ve focused on these rather than houses for this article.²

City	Average price per square metre in EUR³
Munich	€7821 per sqm
Frankfurt am Main	€5437 per sqm
Hamburg	€5157 per sqm
Stuttgart	€4477 per sqm
Berlin	€4896 per sqm
Cologne	€4547 per sqm
Dusseldorf	€4175 per sqm

As seen on 17 July 2024

So, using the above, we can estimate that for a smaller 50smq apartment for a single or couple in Berlin for instance, you could expect to spend somewhere in the vicinity of EUR€244,800.

How to find property to buy in Germany

Property agencies and agents

Known as mobilienhändler or makler, German property agents are not required to be licensed to operate, but are required to hold a specific permit under the Trade Regulations Act. To obtain this, they must meet strict criteria related to qualifications, personal, and financial conduct.⁴

You can find a local agent by word of mouth, researching online or by looking for the name of the responsible agent or agency on an online listing. If any time you have concerns over the conduct of an agency or agent, you can seek support via the European Consumer Centre Germany.

Property websites in Germany

A quick and easy way to browse sale listings and prices throughout Germany, dedicated real estate websites are the ideal place to begin your property hunt.

Popular sites for searching out property listings throughout Germany include:

• Immobilienscout24.de
• Immowelt.de
• Immonet.de
• Wg-gesucht.de
• Immosuchmaschine.de

Alternatively, you may like to visit an agency's website in your preferred city to find local listings.

How to choose the right property to buy in Germany. What to consider

Despite its considerably smaller size when compared with Australia, as an older and much more densely populated country, Germany offers a diverse range of properties and lifestyles depending on where you buy.

We recommend considering the following to determine which property will be best suited to your needs:

• Which city or region you like best
• Proximity to employment, schools, shopping, healthcare or similar
• What the public transport looks like
• The ideal property features such as the number of bedrooms and bathrooms and whether a new or old property is preferred
• Whether you want an apartment or a house
• If you want your property to be close to being within or close to a major city or if a quieter, suburban location is desired
• Your budget range

Can you get a mortgage in Germany as an Australian?

Yes, many banks in Germany will approve home loans for foreigners, however, to do so, you usually need a valid residence permit or visa, proof of income or a job. Other approval criteria specific to the bank you apply with will also need to be met – this is quite similar to securing a mortgage in Australia.

Additionally, it should be noted, as a non-EU resident, you may be limited in how much you can borrow when compared to a German citizen, though this can vary based on the lender in question and your visa status.

Documents needed for buying a property in Germany as an Australian

As an Australian buying property in Germany, a mixture of documents is usually required to complete the purchase. To be supplied to the seller and the notary, this typically will include but is not always limited to⁵:

• Confirmation of finance
• A Selbstauskunft or self-disclosure document outlining personal details
• Identity documents such as a passport
• Tax identification number, as a non-resident, Australians may need a German tax number (Steuernummer) obtained from the local tax office

While not always the case, you may be asked to translate some of your Australian documentation into German. If this is requested, we suggest enquiring with the applicable party about an approved translation service that you can use.

What are the taxes and fees usually levied on property purchases in Germany?

Considered some of the highest property transaction costs in Europe, the fees and taxes associated with buying property in Germany generally add up to around 10% or more of the property price.

These include⁶:

• Property sale tax (Grunderwerbsteuer) of between 3.5–6.5%
• Notary fees, which are usually around 1.2–1.5% depending on the specifics of your purchase
• Registration fees at 0.8–1.2%
• Estate agent commission/fee (Maklergebühr) usually from 1.5 - 3% but can go as high as 7.14% depending on the state you are buying in⁷

Interestingly, while agent commission fees used to be covered by the seller, new legislation now sees commission costs split equally between the seller and buyer.⁷

Steps to take to buy a house in Germany

Sharing some similarities with Australia, buying property in Germany also comes with some key differences, notably, the absence of a solicitor or conveyancer, instead, you’ll need to engage a notary.

Outlined below is the basic steps, including where a notary is required, to finalise a property purchase as an Australian buying in Germany.⁸

• Look into which lender and mortgage product might suit your needs and enquire about how much you may be able to borrow
• Find the property you want to buy
• Make an offer the seller agrees to and officially reserve it, this typically involves a small fee and gives you 2 to 4 weeks to finalise your mortgage and other paperwork
• Get a notary to draw up the sale/purchase contract
• Finalise your finance
• Sign the purchase contract, and have the notary register the sale
• Pay all taxes and fees outlined above
• Transfer the purchase price in full to the seller
• Gain full access to the property
• You are entered into the German land registry (Grundbuch) and become the lawful owner (within 8 to 16 weeks of signing the purchase contract)

Avoiding scams when buying a property in Germany

Despite a robust and well-regulated real estate industry, there are still some watchpoints to be aware of as an Australian buying property in Germany. To avoid falling victim to any property scams we recommend that you:

1. Only work with a registered agent that holds the proper permits
2. Never buy a property sight-unseen as there is always a risk it does not match the listing
3. Only search for property using reputable websites to avoid falling prey to fake listings
4. Ensure you engage a translator if your German is less than fluent to avoid potentially being taken advantage of by unscrupulous agents or sellers
5. Ask for recommendations from friends or industry experts regarding trusted notaries who will protect your interests

What else to keep in mind

It should be noted that while you are permitted to buy property in Germany as an Australian, doing so does not give you citizenship, residency or permission to live and work in Germany long-term. You will need to pursue an appropriate visa for your circumstances to remain in Germany indefinitely.

Additionally, while English as a second language is increasingly common for German citizens, if you opt to live outside of major cities or in regional areas, you may still find communicating in English a challenge. As such, actively learning German is encouraged, appreciated by locals and will help you to more fully integrate into your new home.

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This article is purely for general information purposes and is not to be taken as financial advice. We recommend that you obtain independent financial advice before making any form of decision.

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Sources:

1. Treasury.gov.au - Australia/Germany Taxation Agreement
2. Statista - German Housing Market
3. Statista - Average Apartment Cost By City
4. Bund.de - Real Estate Agents In Germany
5. Integral Immobilien- Documents
6. Hypofriend - Taxes & Fees
7. Hypofriend - Real Estate Commission
8. Hypofriend - House Buying Process

Sources checked on: 17 July 2024