Bad investments in East Germany
Although bad investments in East Germany did not leave any macroeconomic
turmoil in their wake they are firmly fixed in the memory of the German real
estate sector.
This experience may also explain the reluctance to invest and low
levels of borrowing in the current real estate boom. Although house prices have
risen by more than 40% since 2009, lending growth remains muted. While low
interest rates have helped to boost new business, standard repayment rates
have doubled from 1.5% to three% per annum.
As a result, the mortgage book
has only grown by a few% since 2009 and only slightly more quickly than the
inflation rate.
EU Forecast
euf:b.a18b:157/nws-01