House price growth in Germany could undermine the country's stability

House price growth in Germany could undermine the country's stability

Experts fear that the rapid growth of prices in the housing market in Germany can lead to formation of a «bubble». The experience of other European countries shows that the low demand and high liquidity contribute to the formation of inflated property prices and threatening the financial stability of the country.

In 2011 the price of apartments in new buildings in Hamburg, Berlin, Munich and Cologne, raised by 9%. The first half of 2012 was also characterized by the rise in prices, what was noted in 7 major cities in Germany. It should be noted that within 5 years, from 2007 to 2012, property prices in the country on average increased by 12%. The demand for housing has not kept pace with construction.

Despite this situation, the experts agree the real estate market remains manageable only if the state to strengthen control over the growth of prices in the major cities of Germany.