Private Wealth Accumulation: Public Saving Scheme for Building Purposes – Central Savings Motive for Many Households

For around three quarters of the people in Germany saving for building purposes, the public promotion of savings dedicated to homeownership (the so-called Bausparen) through housing bonuses is a major reason for concluding a building savings account. The saving scheme for building purposes, subsidised by the German government, is usually chosen as an additional savings option – it does not replace other forms of saving. Especially young households and families conclude building savings accounts.

A vast majority of people saving for building purposes spend the payments received under the contract for housing measures. The money is mainly used for modernising and renovating living space. These are the key findings of a representative study recently conducted by the Centre for European Economic Research (ZEW), Mannheim, surveying around 1,600 customers of the four building societies in the federal state of Baden-Württemberg. Additionally, data on the saving activities of German households from the Federal Statistical Office Germany was includes in the study.

Analyses regarding different population groups show that broad sections of the population, especially families, participate in saving activities for building purposes. Compared with other forms of saving, savings dedicated to homeownership, together with savings deposits, is the most common saving activity among young households under the age of 25. On average, around 70 per cent of all people saving for building purposes state that they spend all or parts of these deposits for housing-related purposes. Among the group of middle-income people, with a net income of around EUR 2,000 to EUR 3,000 per month, this share even reaches over 80 per cent.

Furthermore, the study conducted by ZEW illustrates that households receiving an additional prime of EUR 10 per year, save some additional EUR 134. Only small amounts of money are transferred between different forms of saving. The overall amount of saving increased to EUR 112. Taking into consideration the statistical uncertainty, the effect on overall savings is 95 per cent likely to lie between EUR 82 and EUR 142 per year.

Contact

Dr. Peter Westerheide, Phone: +49 621/1235-142, E-mail: westerheide@zew.de