Germany tipped to be next for property price slump

Published:  11 Oct at 6 PM
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With rising prices expected to slow dramatically towards the end of the year, Germany is facing the possibility of a disastrous house price slump.

The house market in Germany is teetering on the edge of going into reverse, with the release over the next few days of the Europace house price index report detailing the last quarter expected to contain bad news. To avoid a gloomy outlook, September’s house prices will need to have increased by almost two per cent to continue the rises earlier this year.

Against a backdrop of falling GDP and government battles over Greece, Spain and the Eurozone debt crisis, any increase in prices over the month seems unlikely. Industry insiders are forecasting a slow-don of the housing market, if not in October then certainly by the beginning of 2013, and Germany’s rising unemployment figures are causing concerns for those not already on the property ladder, as they have in the UK and other European countries.

The average increase over the year to date is 0.3 per cent, with a similar prediction for the third quarter and a slightly reduced figure at 0.2 per cent for the last quarter. This could signal the last gasp of the country’s property boom, which has continued as prices in the rest of Europe have fallen fast.

Notwithstanding the omens and rumours, experts don’t see an immediate slump in the market, as German mortgage lending is especially stable and Germany has a strong rental rather than purchase culture. Even so, according to analysts, a further fall in the labour market in 2013 is likely to rebound into the property sector.
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Comments » There is 1 comment

Andrew wrote 8 years ago:

Even if the prices actually do relax a little bit, this is not as disastrous in Germany as it would seem in much of the English speaking world. As the last paragraph says, the culture of renting is very strong. Not to mention when Germans buy, they tend to buy for a much longer timeperiod than other cultures I have seen. Even moving in involves usually buying a kitchen and even lights. So while it is interesting to see these numbers, it really shouldn't be as worrisome as it might sound.

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