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Interesting but misleading.

German house prices have risen sharply since 2009 - 10% or so in the past twelve months alone - but there has been no corresponding credit bubble. In fact, German house prices ran counter-trend for more than a decade prior to the financial crisis, failing even to keep up with wage growth. The recent spike in prices is a relative re-pricing of real estate rather than an inflationary bubble driven by cheap credit. I suspect that capital outflows from the eurozone periphery are also partly responsible, as with London.

In any case, the Bundesbank is looking at imposing limitations on loan-to-value if the trend persists.


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