Studies conducted by the German Federal Bank showed that real estate prices in Germany are significantly overstated in comparison with justified by about 5 and up to 10%, while in the seven major cities of Germany this percentage reaches 20.
According to the head of the department of the economic situation in the Budesbank – Herman Joseph Hanzen, such an increase in real estate prices is determined by a promising German economy. The latest reforms did not go in vain. Ten years ago about such a profitable position as it was now impossible to dream. Growth in housing prices began several years ago.
There is another reason, according to the expert of the Bundesbank – buyers who have several tens of thousands of capital, has the opportunity to agree on a mortgage loan of 150 thousand euros for ten years, only under 2.5% per annum. Such low interest is the return after a protracted crisis in the eurozone. Then the European Central Bank decided to reduce the cost of credit resources. The crisis, however, gave a powerful impetus to the German real estate market.
According to the same Herman Joseph Hanzen, people want to invest their money as profitably as possible. And what could be better than real estate? This gave rise to extraordinary demand in the German real estate market. Such demand gives rise to prices – the average price for Germany per square meter is about 2000 €, and in large university cities the price reaches 4000. Of course, the Germans and with some degree of fear look at such an increase in prices, because they know the bitter experience of Ireland, Spain and the United States, where the strongest financial crises burst out as a result of collapse in the real estate market.
But German experts react soothingly to these moods: the German market has not yet threatened. Professor Michael Fogtlander, expert of the Institute of German Economics, gave a full assessment of foreign experience and a comparative analysis on this subject with the German real estate market. According to him, the volume of housing loans over these few years remain stable, and there are no trends even to double. In addition, German banks, in terms of selection criteria, is not an example of strictly than the same American.