The German property market was one of the few in Europe that managed to avoid a slump following the 2008/09 financial crisis. However, while property prices in the country have remained on a steady upward trend over the past decade (the national property price index rose by 5.3 per cent in the year of July 2015), a shortage of houses could drive property prices up sharply over the coming year. Possibly even out of control.
It’s not that German firms aren’t building houses, they are, but demand is by far outweighing supply and this could put pressure on an already buoyant market.
In fact, a report carried out by Moody’s Analysis in early 2015 named Germany as one of the three destinations most at risk of experiencing a property bubble in the near future – the UK and Norway being the other two.
As a foreigner, the chance of being awarded a mortgage for a German property is often down to a lender’s discretion. Not only will they take into account the value of a property, but they’ll also look into the value of the borrower, taking into account factors such as employment status, salary and any outstanding debts. It is due in large parts to this tight control in terms of lending that allowed Germany to avoid much of the financial distress that hampered by many other European countries in the late 2000s.