German Central Bank Warns Housing 25 Percent Overvalued

Fears of a property bubble in the euro zone’s largest economy are mounting, with the German central bank warning that house prices in Germany have spiked in as many as 125 cities in the country.
The bank said foreign investment and international demand along with low borrowing costs, which make it easier to finance buying a house, have led to a surge in demand for residential property.

Urban properties are now overpriced by 10-20 percent, the bank said, adding that “in major cities the prices for residential property deviate by about 25 percent.” It added that apartment prices have gone up by 9 percent in Germany’s seven largest cities.
The bank already warned of big jumps in residential property prices in October last year. However this marks its most severe warning.

“Prices for residential property have risen faster than the economic and demographic fundamentals suggest,” the bank said.

via CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza