The head of the second largest letting firm in Germany has warned that the county's housing market is becoming 'prohibitively expensive'. In a report from Bloomberg.com, the country is near to and should prepare for the eventual downturn.
In an interview, Deutsche Wohnen AG Chief Executive Officer Michael Zahn, in an interview, said that investors would continue to outbid each other on the belief that home equities would continue their upward trend, the downside is the rental rates currently in place are not justified.
In response to these market conditions, the company is putting of acquisitions and is busy refinancing its debt burden. Zahn said, "There's a limit on how much I'm willing to pay. Opportunities to refinance right now are much more attractive than acquiring."
He added that his company only added 8,000 homes to its current portfolio of 107,000 apartments in Berlin. The company paid on average 1,200 euros per square meter, which is about 50 percent more than the per square meter average price just half a decade ago.
The German housing market has been riding a period of growth in the last five years. In a report from fxstreet.com, there are several factors which are driving the growth of the German housing market. The first is the high level of consumer confidence in the month of May, according to a survey conductd by GfK. This is due to the increase in disposable income as well as continued increase in demand for labor as unemployment is declining.
Also contributing is the favorable monetary and fiscal conditions present under the current government. The German stock market as a whole is on the rise but spending remains the same, with households preferring to save their money as cash or in bank deposits. All these fuel the demand for housing but with limited supplies, exorbitant rates would overcome the growth in the long run.
