Solution to the Riddle

It's the German.

How did I solve it?

The Options

Well, we know from examining the clues and the question that:
• The possible nationalities are:
• Norwegian
• Brit
• Swede
• Dane
• German
• The possible colors are:
• Red
• Green
• White
• Yellow
• Blue
• The possible beverages are:
• Tea
• Coffee
• Milk
• Beer
• Water
• The possible cigars are:
• Pall Mall
• Dunhill
• Blends
• BlueMaster
• Prince
• The possible pets are:
• Dogs
• Birds
• Cats
• Horses
• Fish

The Deduction

Well, we know there are five houses. We'll assume they're all in a row, and are numbered from left to right. We know the Norwegian is in the first house:
 House #1 #2 #3 #4 #5 Color ? ? ? ? ? Natl Norweg ? ? ? ? Bevg ? ? ? ? ? Smokes ? ? ? ? ? Pet ? ? ? ? ?

Since the Brit lives in the red house, the Norwegian can't. We also know the Norwegian lives next to the blue house, so his house isn't blue. We also know that the green house is to the left of the white house; the Norwegian can't live in the white house since there is no house to the left, and can't live in the green house because his only neighbor, the one to the right, is known to live in the blue house. Therefore, the Norwegian lives in the yellow house.

We also know the owner of the yellow house smokes Dunhill, and that the Norwegian has a neighbor with a blue house (the Norwegian only has one neighbor, to the right.)

So here's what our matrix looks like now:
 House #1 #2 #3 #4 #5 Color Yellow Blue ? ? ? Natl Norweg ? ? ? ? Bevg ? ? ? ? ? Smokes Dunhill ? ? ? ? Pet ? ? ? ? ?

The man who keeps horses lives next to he man who smokes Dunhill; so the horse owner lives in the blue house. The center house's owner drinks milk, the green house's owner drinks coffee, and the green house is to the left of the white house. Since we know the left two houses are the yellow and blue houses, the only position for the green and white are green as the fourth and white as the fifth, since the middle (third) drinks milk and the owner of the green house drinks coffee. The middle house has to be red, and therefore is the Brit's. So now this is what we know:
 House #1 #2 #3 #4 #5 Color Yellow Blue Red Green White Natl Norweg ? Brit ? ? Bevg ? ? Milk Coffee ? Smokes Dunhill ? ? ? ? Pet ? Horse ? ? ?

The owner who smokes BlueMaster drinks beer; since we know what houses #3 and #4 drink [and neither are beer] and we know what house #1 smokes [and its not BlueMaster], the only possibilities are houses #2 and #5. Keep this information in mind. Since it is evident house #1 cannot drink beer (only house #2 or #5 can), the only possible beverages for house #1 are water and tea, but since the Dane drinks tea, house #1 drinks water. The man who smokes Blends lives next to someone who drinks water; the only house next to #1 (the water-drinking house) is #2. The man who smokes Blends lives next to the one who has cats; so the cat-house is #1 or #3.

 House #1 #2 #3 #4 #5 Color Yellow Blue Red Green White Natl Norweg ? Brit ? ? Bevg Water B/T? Milk Coffee B/T? Smokes Dunhill Blends ? ? ? Pet Cat? Horse Cat? ? ?

Since the Dane drinks tea, he must live in either house #2 or #5. The Swede and German could live in house #2, #4 or #5.

 House #1 #2 #3 #4 #5 Color Yellow Blue Red Green White Natl Norweg D/S/G? Brit S/G? D/S/G? Bevg Water B/T? Milk Coffee B/T? Smokes Dunhill Blends ? ? ? Pet Cat? Horse Cat? ? ?

We know the beer-drinker smokes BlueMaster. The only houses that could drink beer are #2 and #5, but since we know that #2 smokes Blends, #5 must be the house which drinks beer and smokes BlueMaster, and #2 has to be the house that drinks tea and the house of the Dane. We can eliminate the possibility of the Dane's residence being house #5.

 House #1 #2 #3 #4 #5 Color Yellow Blue Red Green White Natl Norweg Dane Brit S/G? S/G? Bevg Water Tea Milk Coffee Beer Smokes Dunhill Blends ? ? BlueM Pet Cat? Horse Cat? ? ?

We know the German smokes Prince. Therefore, he could not live at house #5 and therefore has to live at house #4. The Swede must live at house #5; we also know house #5 raises dogs since we know the Swede raises dogs, and that house #4 smokes Prince since the German smokes Prince.

 House #1 #2 #3 #4 #5 Color Yellow Blue Red Green White Natl Norweg Dane Brit German Swede Bevg Water Tea Milk Coffee Beer Smokes Dunhill Blends ? Prince BlueM Pet Cat? Horse Cat? ? Dogs

The only possibility for house #3's smokes is Pall Mall; all of the others are taken. We know that whoever smokes Pall Mall raises birds; so house #3 raises birds, and house #1 therefore has cats, since the only houses which could have had cats were #1 and #3, and #3 has been eliminated.

 House #1 #2 #3 #4 #5 Color Yellow Blue Red Green White Natl Norweg Dane Brit German Swede Bevg Water Tea Milk Coffee Beer Smokes Dunhill Blends PallM Prince BlueM Pet Cat Horse Birds ? Dogs

The only remaining pet is the fish, which must be owned by the German. We now know who owns the fish, and have solved the puzzle.

The completed matrix of data is as follows:
 House #1 #2 #3 #4 #5 Color Yellow Blue Red Green White Natl Norweg Dane Brit German Swede Bevg Water Tea Milk Coffee Beer Smokes Dunhill Blends PallM Prince BlueM Pet Cat Horse Birds Fish Dogs

Q.E.D.