German Property Price Boom Fuels Bubble Angst

On 15 October 2012, the Financial Times published an article on one of the surprising consequences of the Eurozone crisis: Germany’s real estate price boom. While the rise in German house prices, led by the capital Berlin, is fuelled mostly by foreign investors seeking a haven from the Eurozone crisis, some analysts fear that it might be a sign of a property bubble, given the country’s traditionally “sleepy” housing market.

**Berlin at the Forefront**
The FT quotes data by the research company F+B showing that in the past five years, average sale prices in Berlin have gone up by 23 percent. The real estate consultancy Jones Lang LaSalle (NYSE:JLL) reports an even steeper rise in median prices in Berlin, namely 20 percent in the twelve months to June, and 37.5 percent since 2009. Price rises in other German major cities have also been pronounced, with Spiegel reporting at t