Since real estate prices seem to be rising incessantly, the word "real estate bubble" comes up every year. So far there has always been an all-clear shortly afterwards. The most recent detailed report on an impending real estate bubble was published by "Der Spiegel". Once again, it refers to the empirica bubble index.
The word "real estate bubble" is quickly associated by market observers with the word "burst". In 2007, a burst real estate bubble in the USA was the cause of a financial crisis that spread worldwide. Is it happening again now?
The empirica Institute in Berlin writes: "Of course we have a real estate bubble in the housing market". The institute has kept the empirica price database for property prices since 2004 and regularly publishes the so-called empirica bubble index. In it, it provides the necessary key figures from which trends towards bubble formation can be read.
At present, the high multipliers in the price calculation are still mainly due to the current low interest rates. But if interest rates rise, prices would have to go down or rents would have to go up. At present, however, sharply rising rents are hardly politically enforceable, and purchase prices for condominiums of more than ten years' income in the top seven cities are not achievable in the long run. Then the following forecast applies. "Either prices will fall at some point or incomes will rise dramatically." However, Germany's dependence on exports and unresolved structural problems stand in the way of sharply rising incomes.
Conclusion: With an increasing supply of housing and a better distribution of demand from the swarm cities to the surrounding areas, the pressure will ease. So the question is not "Is there a bubble?", but "When will the bubble burst?". In the current constellation, a scenario is conceivable "in which the air only escapes slowly", i.e. property prices fall slowly, empirica diagnoses.
(Photo: © Gerd Altmann, Pixabay)
