Bubble bubble toil and trouble in Germany

Any time property prices rise rapidly it can make the property market subject to an unjustified surge in confidence, that is why I am surprised to see Germany’s housing market has risen 10% in the last 12 months. Germany has long been lauded as an example of how to maintain a ‘steady’ market, but it seems that the last year has disproved this rule.

I can’t help but think that their market is undergoing a dynamic similar to the one our own had in 2003 up to the boom. During that time the German and French economies were not performing as well as ours and credit became cheap and available, their banks currently don’t have the funding constraints ours do and this means that they are able to lend at a time when rates are very low making carry cost very cheap.

The non-synchronized nature of central and peripheral Europe is showing, in 2003 our economy was doing well and this cheap credit environment aided in helping prices shoot up. Now the …

Read More