German property is booming
Germany's policy makers fear the country's housing market could be in a bubble.
German policymakers, ever wary of rising prices, have begun to fret that their housing market could be developing a bubble.
In 2010 and 2011, house prices rose by 2.5% and 5.5% respectively. In Berlin and Munich, apartment prices increased by around 10% last year. Sales have soared: "German apartments are getting ripped out of people's hands", says Andre Adami of BulwienGesa. Rents are buoyant, having climbed by 8.3% in Berlin over the past 12 months.
So far "house-price increases look sensible", says Rene Schultes in The Wall Street Journal. "There is an element of catch-up." House prices fell in inflation-adjusted terms between 1995 and 2009. The fundamentals support higher prices, with demand climbing as more people choose to live alone and supply struggling to catch up with this trend.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
A hallmark of a housing bubble is crazy lending, and there's no sign of that yet. Residential mortgage loans are up by just 1% a year in the past decade. "For now, rising prices in Germany are a healthy... sign."
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
8 of the best houses for sale with tennis courts
The best houses for sale with tennis courts – from a period property in Dumfries and Galloway with two islands on the River Dee, to a house in Cumbria with a 1977 En Tout Cas tennis court
-
Review: Eden Roc Cap Cana – fun, sun and golf in the Caribbean
Travel Eden Roc Cap Cana in the Dominican Republic offers everything from relaxing by the pool to a world-class golf course