The Germans and the dumb Aussies!

http://www.theage.com.au/business/t...ession-is-holding-us-back-20140627-zsodc.html

“It’s not a house, it’s a home.” Daryl Kerrigan nailed our obsession with home ownership in the iconic Australian film The Castle.
But is this obsession actually doing us any good?
The International Monetary Fund (IMF) warned in June that housing bubbles across the Anglo-Saxon world are doing a lot of damage.
“IMF research shows that of the nearly 50 systemic banking crises in recent decades, more than two thirds were preceded by boom-bust patterns in house prices,” said Dr Min Zhu, deputy managing director of the IMF.
One country that has struck the right balance is Germany, argues economist Jim Kemeny, who teaches housing and urban sociology at the University of Uppsala and has been criticising the Australian homeownership ideal for the past 30 years.
Europe's biggest economy has not had a single housing boom in the post-war period, he says.
That record comes courtesy of a cultural disinterest in home ownership, progressive social housing programs, conservative banking policies and government legislation that protects and encourages long-term renters.
Over the last decade, the ratio of house prices versus household incomes has been falling in Germany, and despite a slight pickup over recent years, it was still almost 17 per cent below its long-run average at the end of last year.
By contrast, Australia has the third-highest house price to income ratio in the world, at 4.3 times the average annual income according to the Australian Bureau of Statistics.
Despite a relatively affordable housing market, Germans just don't seem that interested in purchasing property. Certainly not for investment.
“Germans are inherently debt averse,” said Oliver Hartwich, a German expat and executive director of the New Zealand institute.
“German banks are also very conservative, in the past they have demanded up to 33 per cent of a mortgage payment up front, with a 10 to 30 year fixed interest rate.” said Mr Hartwich.
Gee Lee, a German who works for the German-Australian chamber of commerce, said he “would never consider purchasing a house in Germany.”
Neither would Christiane Sier, who emigrated to Australia in 1985.
“Here it was all, house, house, house, I just thought they were crazy about it,” she said.
“Unfortunately I married a builder so I had no choice.”
Only 41 per cent of Germans own a house. And that's a fact that 93 per cent of them are very happy with, according to the OECD.
Instead, Germans are renters, very long-term renters.
The German rental market is highly regulated, with laws favouring tenants over landlords.
“It’s pretty much impossible to get rid of a paying tenant,” said Mr Hartwich. “It’s a big enough struggle to get one out that isn’t paying.”
An eviction can make headlines, as in the case of Friedhelm Adolfs, who after 40 years was evicted from his Berlin apartment for chain smoking.
A 40-year lease is not uncommon in Germany, where the majority of rental contracts are indefinite.
The combination of long leases, a solid supply of rental housing that keeps rents low and a market that does not provide a significant return on residential investment means that Germans have no desire to ‘trade up’ for better properties.
Germans are far more interested in raising capital in more productive ways such as investing in businesses, said Mr Hartwich.
And once they’ve got the capital required, often not until they are in their 50s, they tend to buy a house that will last generations, said Mrs Sier.
“They stay put, build a community and bring other generations of the family into it,” she said.