Residential property prices in Germany jump amid cheap ECB money

Residential property prices in Germany jump amid cheap ECB money
06/01/2020 , by , in INTERNATIONAL

German property prices jumped in the third quarter as record-low borrowing costs and housing shortages continued to push up demand for apartments in urban areas, data showed.

Prices for owner-occupied dwellings in Germany’s seven largest metropolises rose by 9% year on year from July through September, the Federal Statistics Office said.

Prices for single-family and two-family houses in Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Duesseldorf were up 7.5% year on year in the third quarter.

Among the factors pushing up residential property prices are the European Central Bank’s ultra-low interest rates, capacity constraints and bottlenecks in the construction sector as well as an influx of people to cities, a spokeswoman for the Federal Statistics Office said.

Officials from Germany’s central bank, the Bundesbank, have repeatedly warned that real estate prices in cities may be 15% to 30% overvalued, hinting that a property bubble may be developing, a potential risk for financial stability.

The federal government has made billions of euros for social housing available, but the outflow of earmarked funds has been slowed down by planning bottlenecks at local authorities and capacity constraints in the construction sector.

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