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Causes Of Uk And Irish Boom About To Go Deutche?

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I heard a piece on the radio earlier that the Germans are predicted to follow the UK path to HPI prompted by a mass loss of trust in the financial services sector.

Apparently Germans got burned by recent Government stock sell - offs (including telecoms I think) and saw thier shares 1/2 in value, this hot on the heals of the dot - com bust.

To compound matters a spate of recent fund management failures including property funds has caused great cynisicm about stock market and managed investments.

As a result Germans are turning to owning thier own real estate as a route to improving thier wealth,.

Sound familiar..................?

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Isn't it true that all ftbs have to find a 40% deposit for a mortgage over there?

Ah ha, you touch on another key reason for our HPI - mortgage deregulation. Here in the late 1970s 95%+ mortgages became available, when prior to this you needed 30% deposits. It is more or less accepted that the German mortgage market will shortly go the same route.

UK style HPI en - route.

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Isn't it true that all ftbs have to find a 40% deposit for a mortgage over there?

No not as much as that but you won't(or will find it very difficult) get a 100% mortgage. Lenders expect at least 10% but dependent on circumstances and relationship with bank they will be more flexible. Fixed rate loans are the most popular as well. Fee's and taxes usually also amount to around 10% plus there is a tax on profits of selling property within I think 5 years. There will be no housing boom in general in Germany till the economy picks up. There may be odd hot spots due to local conditions but no overall boom that you see in the UK. :ph34r:

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Isn't it true that all ftbs have to find a 40% deposit for a mortgage over there?

No - this is not true as I have already pointed out here. In 1985 we bought a house for DM 225,000 (about € 120,000) with no deposit apart from two Bausparverträge worth DM 40,000 in total, although the actual amount of our own money in these Bausparverträge was around DM 15,000.

The house is now worth around € 200,000, so there has been a little appreciation, although this is nothing sensational, of course.

I know other people (of British nationality) who bought with no deposit at all, not even Bausparverträge.

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No - this is not true as I have already pointed out here. In 1985 we bought a house for DM 225,000 (about € 120,000) with no deposit apart from two Bausparverträge worth DM 40,000 in total, although the actual amount of our own money in these Bausparverträge was around DM 15,000.

The house is now worth around € 200,000, so there has been a little appreciation, although this is nothing sensational, of course.

I know other people (of British nationality) who bought with no deposit at all, not even Bausparverträge.

Bausparverträge?

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Ah ha, you touch on another key reason for our HPI - mortgage deregulation. Here in the late 1970s 95%+ mortgages became available, when prior to this you needed 30% deposits. It is more or less accepted that the German mortgage market will shortly go the same route.

UK style HPI en - route.

Except that the population in Germany is going down and they aren't as restrictive to building new houses as we are here. And there is no stigma attached to renting....as there is here.

So in short...unlikely

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Bausparverträge?

Sorry. I've explained what these are, but of course I can't assume you've read my previous posts.

These are savings contracts with the purpose of building (but in practice not only building, but also buying second-hand properties as well). You save 40 % and get 60 % at a low rate of interest, but with a high rate of repayment. They used to be quite popular, but not so much now as the interest rates are low anyway and there is not much interest in buying property anyway.

It is true that there is a lot of building - an awful lot of it, in fact, at least around these parts (Hamburg).

As far as tax is concerned. The Spekulationsfrist is 10 years for property that you do not use yourself, i.e. rented property. This was extended from previously 2 years on 31.12.1998, which was a bit peculiar, as many people had been losing money rather than gaining it on bad investments in eastern Germany where prices plunged.

If you live in the property in the year of sale and two years prior to sale you are considered an owner-occupier and do not pay the tax.

There are talks, however, of abolishing this Spekulationsfrist (speculation period) altogether, so that the tax will always be raised, no matter when you sell. However no details are known. Nor is it known how gains will be calculated (with or without inflation, for example).

There is a "Freigrenze" of € 512 for speculation gains (including equities). That means that you pay no tax on the first € 512. Anything above that is taxed in full. (This is different from a "Freibetrag" or an allowance which is always free of tax.)

The new laws on speculation are expected to come into effect in 2008. However this was 2007 at the time of the Coalition Talks and, as mentioned, everything is very vague at the moment.

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Except that the population in Germany is going down and they aren't as restrictive to building new houses as we are here. And there is no stigma attached to renting....as there is here.

So in short...unlikely

I recall being constantly told our population was declining. Also many parts of world had a boom despite low population density, the US and Russia have low densities.

Renting will decline as people seek property as an asset to replace thier failing expensive managed investments.

Eevn places like Libya and Morrocco are beginning property booms along with the rest. Do you really think the Germans will remain detatched? No chance.

As for our planning laws, yes they are about the most restrictive on the Globe. However, places with far more lax controls have had booms, from Brazil to Croatia, Bahammas to Moscow.

I remind you that all the bearish types predicted throwing money into Ireland was folly. Wrong as usual.

Edited by dogbox

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I might add that the speculation period for equities is currently one year (extended from 6 months) - not that you get the impression that that's 10 years as well.

However there is talk of abolishing this as well and introducing a flat rate of 20 % no matter when you sell.

As is the case with property, no details are known. Will the Freigrenze (cut-off) remain? Will there be Freibeträge (allowances)? Will inflation be taken into account? Will old investments be taken into account?

Nothing is known.

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I recall being constantly told our population was declining. Also many parts of world had a boom despite low population density, the US and Russia have low densities.

Renting will decline as people seek property as an asset to replace thier failing expensive managed investments.

Eevn places like Libya and Morrocco are beginning property booms along with the rest. Do you really think the Germans will remain detatched? No chance.

As for our planning laws, yes they are about the most restrictive on the Globe. However, places with far more lax controls have had booms, from Brazil to Croatia, Bahammas to Moscow.

I remind you that all the bearish types predicted throwing money into Ireland was folly. Wrong as usual.

Brazil - booming economy

Croatia - speculation due to the likes of the Brits investing

Bahammas - speculation by the Americans

Moscow - booming economy, lots of oil money.

Germany doesn't come under any of these categories and isn't likely to

Throwing money into Ireland is folly and has been for a very long time.

Germany is 4 times less densely populated than UK and they definitely don't have a property shortage and the population is in decline.

Non of this adds up to a UK style property boom.

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Hi DB,

Just because you want something to be so doesn't necessarily mean it will come to pass.

As has been pointed out on this and other threads on the subject, Germany is totally different to the UK, in terms of economics, planning regulations, attitudes to debt, attitudes to renting/owning, demographics etc.

I do not think it is simply a matter of extrapolating what has happened in one country to another.

You may have bought a lemon in Berlin.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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