Housing in German cities is overvalued by 30%, experts of the country’s Central Bank say, Interfax news agency reports on Wednesday.
Over the past year, prices for residential property in 127 German cities have grown by 8%, whereas for the previous five years, prices increased on average by 6.75% per year, MarketWatch informs with the reference to the report made by the Deutsche Bundesbank, the country’s central bank.
In the seven largest cities of Germany (Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf) real estate prices have risen by two thirds since 2010.
Fundamental demographic and economic factors do not envisage such a rapid price growth, the report said. This leap in housing prices can be explained by the extremely low interest rates on loans in Eurozone, but only partly.
The percentage of Germans who own homes is much lower than in most developed countries, and accounts for about 50%. In neighbouring France, the figure is about 66%.