Germany, the engine of European economy, is experiencing a boom in the real estate market. According to the German Federal Bank, the housing prices in major cities are inflated of at least by 20%, according to ee24.com citing poslovni.hr.
The decrease in mortgage rates as well as the activity of foreign investors has led to an increase in demand, while the volume of supply has remained the same or even decreased: less housing was built during the crisis years. As a result, prices have gone up everywhere, but especially in larger cities. Apartments in Berlin, Hamburg, Frankfurt, Cologne, Munich and Dusseldorf charges 25% more than in 2010, while the inflation rate for that period is less than 8%.
Average price of square meter in Berlin is €2,300 (€1,500 in the old buildings of East Berlin and €4,500 in respectable areas in the west of the city). Experts predict that the imbalance of supply and demand, and hence the rise in property prices in Germany will continue in 2014.