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Finance Minister Warns of Possible German Real Estate Bubble

Schäuble stellt Bundeshaushalt 2015 vor
The German finance minister, Wolfgang Schäuble, has warned investors of a possible real estate market bubble in Germany.
  • Why it matters

    Why it matters

    German Finance Minister Wolfgang Schäuble appears more concerned about a real estate bubble than Else König, the top regulator at Bafin, the federal financial supervisory authority.

  • Facts


    • Germany’s finance ministry is monitoring developments on the real estate market.
    • German financial stability committee consists of three representatives from the finance ministry, the federal financial supervisory authority Bafin and the Bundesbank, which monitors interest rates.
    • Residential real estate still costs less in Germany than across much of Europe.
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Low interest rates can be a good thing for a finance minister. They promote growth and investment and generally make voters happy.

But Wolfgang Schäuble, Germany’s finance minister, is worried about the spillover effects low rates on the real estate market.

“I think that we in part are seeing the first signs of a bubble forming,” he told the Handlesblatt in an interview.

Other top regulators are not so sure.

“The greater liquidity in the market is a risk factor,” said Elke König, the head of Bafin, the federal financial supervisory authority. But “right now,” she added, “there is no evidence that banks are significantly easing the conditions for lending. We do see a risk, but no sign of a bubble yet.”

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