Germany: Housing market tensions on the rise – Commerzbank

Research Team at Commerzbank, suggests that the housing boom in Germany is looking increasingly like a bubble as house prices steadily decouple from the fundamental factors.

Key Quotes

“The driving force is very expansionary ECB monetary policy, which is unlikely to change much in the foreseeable future. That said, mortgage interest rates will probably not drop much further and experience from the US shows that the risk of a sharp correction increases in the medium term against the backdrop of rising prices. In addition the clear increase in construction orders points to higher residential investment. As a result, housing shortages should abate in a number of regions.”