What is driving housing prices – risky speculation or sound calculation?

Residential property prices in Germany continued to rise strongly in 2020. Has a Germany-wide price bubble formed that could burst with grave consequences for the German economy? The present analysis can still give the all clear in this respect because housing loans have largely increased in line with incomes, overall economic growth and decreased interest costs. Nevertheless, evidence of speculative bubbles forming in some regions and risks of price drops have grown substantially. This is particularly true given the possibility of a shrinking population.

What is driving housing prices – risky speculation or sound calculation?(PDF, 148 KB, non-accessible)