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Michael Schier / Michael Voigtländer IW-Trends No. 1 25. March 2015 Real Estate Prices

Are Developments on the German Housing Market Still Fundamentally Justified?

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Real Estate Prices
Michael Schier / Michael Voigtländer IW-Trends No. 1 25. March 2015

Real Estate Prices

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German Economic Institute German Economic Institute

Are Developments on the German Housing Market Still Fundamentally Justified?

Over the last few years residential real estate prices in Germany have soared, especially in the metropolises of Munich and Berlin. This development has provoked concerns that speculation is creating a housing bubble in Germany similar to those in Spain and the United Kingdom. With the help of the User cost of Housing Approach it can be shown, however, that in most counties in Germany the current price trend is still fundamentally justified. Though in some cases dramatic, the increases are the result of property prices making up lost ground, having largely stagnated or even fallen prior to 2008. A sudden reversal of the current low interest rate policy would only trigger the slight need for correction typical of a speculative bubble. Were it to endure, however, such a policy would run the risk of changing future behaviour patterns.

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Real Estate Prices
Michael Schier / Michael Voigtländer IW-Trends No. 1 25. March 2015

Michael Schier / Michael Voigtländer: Immobilienpreise – Ist die Entwicklung am deutschen Wohnungsmarkt noch fundamental gerechtfertigt?

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German Economic Institute German Economic Institute

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Pekka Sagner / Michael Voigtländer in International Journal of Housing Policy External Publication 6. May 2022

Supply side effects of the Berlin rent freeze

On 23 February 2020, the Berlin Senate introduced the Berlin rent freeze (‘Mietendeckel’). The law was repealed on 25 March 2021. The Berlin rent freeze was an unprecedented market intervention in the German housing market.

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Pekka Sagner / Michael Voigtländer IW-Trends No. 3 20. August 2021

How the Berlin Rent Cap Affected Private Landlords

The effects of the Berlin rent cap on the city’s housing market were wide-reaching, with the supply of rental accommodation falling by more than half while the cap was in force.

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