German fears push house prices up

Monday, June 18, 2012. Ivan Radford @themovechannel

German private consumer spending rose by 1.5 per cent in 2011, but while some of that is simply on wine and food and other everyday expenditure, a significant proportion is on housing. Why? Because people are scared of inflation and worried about the eurozone financial climate.

Fear in Germany is pushing house prices higher.

German private consumer spending rose by 1.5 per cent in 2011, but while some of that is simply on wine and food and other everyday expenditure, a significant proportion is on housing. Why? Because people are scared of inflation and worried about the eurozone financial climate.

With buyers looking for real estate in a safe haven with strong rental yields, Germany's market has seen prices rise significantly in recent years: values jumped by 2.5 per cent in 2010 and 5.5 per cent in 2011. In Berlin and Munich, according to Money Week, apartment prices rose by as much as 10 per cent.

Experts have disagreed about whether the country is heading for a housing bubble or not, with some arguing that the current boom is fuelled by local demand as well as overseas activity, but prices are still expected to keep climbing higher, even at a slower rate.

"Prices have been driven up by the need for safe investments and inflation hedges", adds Property Investor Europe, "and [Engel & Volkers] predict further growth."

 

 


Author - Dan Johnson

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