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No real estate bubble in sight in Germany

Although property prices in Germany are rising, no bubble is in sight. This is the assessment of a new early warning system for real estate bubbles that was developed by the German Institute for Economic Research (DIW) under contract to the Federal Ministry of Finance. In the study, the institute analyzed the long-term development of real estate markets in twelve countries. For Germany, it was found that in recent decades there has been only one bubble, which began in late 1992 and burst in 1994. In contrast, bubbles in Britain and Spain have occurred even more frequently than in the U.S. The warning system is based on several factors that influence the price development of real estate, among which are the ratio of house prices and rents, as well as income and money supply growth.

(Source: TD News International)