Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Top Stories

German homes are still overvalued despite price drop – Bundesbank

2024 02 19T110650Z 1 LYNXNPEK1I086 RTROPTP 4 GERMANY ECONOMY HOMESALES - Global Banking | Finance

German homes are still overvalued despite price drop – Bundesbank

FRANKFURT (Reuters) – German homes are still overvalued despite a fall in prices last year as the cost of mortgages spiked, the country’s central bank said on Monday.

Germany’s decade-long property boom has unravelled since a sudden bout of inflation forced the European Central Bank (ECB) to hike interest rates, while the domestic economy was hit by more expensive energy imports and sluggish exports.

The price of owner-occupied residential property fell by just over 4% last year according to industry data. The German statistics office put the decline at 8.9% for the first nine months of the year.

Yet the Bundesbank, the ECB’s biggest shareholder, estimated that prices were still 15-20% above where they should be based on Germany’s current demographic and economic situation.

“The overvaluation may not have been fully corrected yet despite a considerable reduction,” the Bundesbank said in its monthly report. “This continues to pose a certain risk of price corrections.”

It said the price-to-income ratio was 20% higher than its reference value while the long-term relationship between property prices, interest rates and incomes showed an overvaluation of between 10% and 15%.

For flats in German cities, the relationship between purchase price and rent lay 20% above its long-term average, the Bundesbank said.

As people were less able to afford to buy, they turned to renting.

Renting a city flat was 5.5% dearer according to Bulwiengesa, a property consultant and analysis firm. New lease contracts were 6.3% more expensive for multi-family homes, according to data from Germany’s association of Pfandbrief banks.

The ECB is widely expected to start cutting rates this year and even Bundesbank President Joachim Nagel, an early supporter of rate hikes, said the “greedy beast” of inflation had now been tamed.

 

(Reporting By Francesco Canepa; Editing by Kirsten Donovan)

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post