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The effect of the European Central Bank's monetary policy on the real estate market in Germany

Author:

Publisher: GRIN Verlag

Published: 2021-10-12

Total Pages: 24

ISBN-13: 3346511146

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Seminar paper from the year 2021 in the subject Economy - Real estate industry, grade: 1,3, University of applied sciences Frankfurt a. M., course: Economic Policy, language: English, abstract: This paper analyses the European monetary policy and its effects on the real estate market. The prices for real estate in Germany are continuously rising at a steady level. High sought-after cities are not only affected by the positive price trend, but far beyond that also less sought-after regions. On the other hand, the European Central Bank has been pursuing a policy of low-interest rates for years, which has been extended by various purchase programmes, especially since the financial crisis and during the current pandemic. A connection between monetary policy and the development of real estate prices can be deduced. Many interest-bearing savings products are expiring, and the low- interest rates make a new investment less attractive. Besides, Germans do not like shares or bond as an investment, the demand for flats and houses, which are seen as supposedly safe investments, has increased. The past has shown how quickly an overheated real estate market can lead to price bubbles and severely shake financial stability.

Book Synopsis The effect of the European Central Bank's monetary policy on the real estate market in Germany by :

Download or read book The effect of the European Central Bank's monetary policy on the real estate market in Germany written by and published by GRIN Verlag. This book was released on 2021-10-12 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2021 in the subject Economy - Real estate industry, grade: 1,3, University of applied sciences Frankfurt a. M., course: Economic Policy, language: English, abstract: This paper analyses the European monetary policy and its effects on the real estate market. The prices for real estate in Germany are continuously rising at a steady level. High sought-after cities are not only affected by the positive price trend, but far beyond that also less sought-after regions. On the other hand, the European Central Bank has been pursuing a policy of low-interest rates for years, which has been extended by various purchase programmes, especially since the financial crisis and during the current pandemic. A connection between monetary policy and the development of real estate prices can be deduced. Many interest-bearing savings products are expiring, and the low- interest rates make a new investment less attractive. Besides, Germans do not like shares or bond as an investment, the demand for flats and houses, which are seen as supposedly safe investments, has increased. The past has shown how quickly an overheated real estate market can lead to price bubbles and severely shake financial stability.

Understanding German Real Estate Markets

Author: Tobias Just

Publisher: Springer Science & Business Media

Published: 2012-01-03

Total Pages: 409

ISBN-13: 3642236111

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Real estate is the biggest real asset class in an economy, and Germany is the biggest economy in Europe. This implies opportunities as well as specific risks for investors and policy makers. As the German real estate markets have by and large been spared severe disruptions in the course of the economic crisis, many questions arise for investors and academics alike. What are the key institutional characteristics of the German real estate markets that make it different? What are the short and long-term drivers of demand and supply? Which regional and functional market segments are most likely to outperform in the next few years? What are the most important pitfalls for investors in Germany? This book gives answers to these and many more questions. The editors have invited a broad range of extensively knowledgeable practitioners and academics from across the relevant real estate spectrum, i.e. economic, legal, tax, planning and financing issues, to express their views. There is no better English publication that gives such a profound and simultaneously entertaining overview of Germany’s real estate markets.

Book Synopsis Understanding German Real Estate Markets by : Tobias Just

Download or read book Understanding German Real Estate Markets written by Tobias Just and published by Springer Science & Business Media. This book was released on 2012-01-03 with total page 409 pages. Available in PDF, EPUB and Kindle. Book excerpt: Real estate is the biggest real asset class in an economy, and Germany is the biggest economy in Europe. This implies opportunities as well as specific risks for investors and policy makers. As the German real estate markets have by and large been spared severe disruptions in the course of the economic crisis, many questions arise for investors and academics alike. What are the key institutional characteristics of the German real estate markets that make it different? What are the short and long-term drivers of demand and supply? Which regional and functional market segments are most likely to outperform in the next few years? What are the most important pitfalls for investors in Germany? This book gives answers to these and many more questions. The editors have invited a broad range of extensively knowledgeable practitioners and academics from across the relevant real estate spectrum, i.e. economic, legal, tax, planning and financing issues, to express their views. There is no better English publication that gives such a profound and simultaneously entertaining overview of Germany’s real estate markets.

Real Estate Bubble in Germany. The German Residential Real Estate Market for the Presence of a Bubble

Author: Kilian Köberlein

Publisher: GRIN Verlag

Published: 2022-09-01

Total Pages: 121

ISBN-13: 3346712796

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Master's Thesis in the subject Economy - Real estate industry, , language: English, abstract: The starting point for this thesis and the associated question were price developments observable on the residential property market as well as increased media reporting. Against this background, the following question was examined with scientific methods within the framework of this thesis: Is a bubble formation recognisable in the German residential real estate market and what regional differences can be identified in answering this question? As a first step, price-influencing factors were examined in more detail and the price development relative to annual rent ratio, income and construction costs was examined. In addition, the effect of the ECB's interest rate policy and the interplay between property prices, monetary policy and asset price inflation were analysed. Hereby it became apparent that the significant price increase for residential property since 2010, and especially accelerated since 2016, can be explained against the backdrop of the extremely low interest rate level and the considerable expansion of money supply. In order to be able to identify price bubbles on the residential property market in a measurable and comprehensible way, the price development was analysed in a second step with the mathematical procedure according to Diba and Grossmann, which uses the Augmented Dickey Fuller Test. The procedure is based on the premise that the price of a good is related to its fundamental value. To examine the price development in the residential property market, the fundamental value used for comparison purposes is derived from the development of the rent price index, the index of average gross monthly earnings and the construction cost index. The house price index was used as a price indicator for residential property. With the help of the Augmented-Dickey-Fuller Test, the development of the various indices was examined and compared with regard to their degree of stationarity. This investigation was carried out for the overall German residential real estate market in the observation period 2010-2021 in order to obtain an up-to-date picture. For the period under consideration from 01.01.2010 to 31.12.2021, a price bubble was not confirmed on the overall German residential property market.

Book Synopsis Real Estate Bubble in Germany. The German Residential Real Estate Market for the Presence of a Bubble by : Kilian Köberlein

Download or read book Real Estate Bubble in Germany. The German Residential Real Estate Market for the Presence of a Bubble written by Kilian Köberlein and published by GRIN Verlag. This book was released on 2022-09-01 with total page 121 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis in the subject Economy - Real estate industry, , language: English, abstract: The starting point for this thesis and the associated question were price developments observable on the residential property market as well as increased media reporting. Against this background, the following question was examined with scientific methods within the framework of this thesis: Is a bubble formation recognisable in the German residential real estate market and what regional differences can be identified in answering this question? As a first step, price-influencing factors were examined in more detail and the price development relative to annual rent ratio, income and construction costs was examined. In addition, the effect of the ECB's interest rate policy and the interplay between property prices, monetary policy and asset price inflation were analysed. Hereby it became apparent that the significant price increase for residential property since 2010, and especially accelerated since 2016, can be explained against the backdrop of the extremely low interest rate level and the considerable expansion of money supply. In order to be able to identify price bubbles on the residential property market in a measurable and comprehensible way, the price development was analysed in a second step with the mathematical procedure according to Diba and Grossmann, which uses the Augmented Dickey Fuller Test. The procedure is based on the premise that the price of a good is related to its fundamental value. To examine the price development in the residential property market, the fundamental value used for comparison purposes is derived from the development of the rent price index, the index of average gross monthly earnings and the construction cost index. The house price index was used as a price indicator for residential property. With the help of the Augmented-Dickey-Fuller Test, the development of the various indices was examined and compared with regard to their degree of stationarity. This investigation was carried out for the overall German residential real estate market in the observation period 2010-2021 in order to obtain an up-to-date picture. For the period under consideration from 01.01.2010 to 31.12.2021, a price bubble was not confirmed on the overall German residential property market.

Euro on Trial

Author: B. Brown

Publisher: Springer

Published: 2004-03-03

Total Pages: 196

ISBN-13: 0230508596

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Euro on Trial looks back - to the aspirations of the founders - and forward - to the possibility of reform or splitting up. After five years of experience with the new currency, new insights are possible into the old arguments for and against union. Monetary union is reversible in part or in whole and this book assesses the costs and benefits.

Book Synopsis Euro on Trial by : B. Brown

Download or read book Euro on Trial written by B. Brown and published by Springer. This book was released on 2004-03-03 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt: Euro on Trial looks back - to the aspirations of the founders - and forward - to the possibility of reform or splitting up. After five years of experience with the new currency, new insights are possible into the old arguments for and against union. Monetary union is reversible in part or in whole and this book assesses the costs and benefits.

The Low Interest Rate Policy of the European Central Bank. Are European Savers being expropriated?

Author: Heiko Schmolke

Publisher: diplom.de

Published: 2017-03-16

Total Pages: 142

ISBN-13: 3960676190

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Central banks around the world have lowered their key interest rates to historical lows and implemented large asset purchase programs in the past few years. Within the scientific and, most recently, also increasingly in the political debate, the nominal interest rate is mainly the subject of discussion. The question is often raised whether saving and retirement provision are still worthwhile for private households, especially in Germany. In this context it is often ignored or not considered that the purchasing power of the nominal interest rates fluctuates considerably with the inflation rate. Inflation-adjusted real interest rates are therefore decisive for the actual income from financial assets and crucial for the savings and investment behavior. This study, therefore, shall play ist part to investigate scientifically the influence and correlation of low and negative key interest rates on yield levels of selected asset classes within the sphere of influence of the European Central Bank. In this context, the mainly populist question is also answered whether savers are expropriated slowly.

Book Synopsis The Low Interest Rate Policy of the European Central Bank. Are European Savers being expropriated? by : Heiko Schmolke

Download or read book The Low Interest Rate Policy of the European Central Bank. Are European Savers being expropriated? written by Heiko Schmolke and published by diplom.de. This book was released on 2017-03-16 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: Central banks around the world have lowered their key interest rates to historical lows and implemented large asset purchase programs in the past few years. Within the scientific and, most recently, also increasingly in the political debate, the nominal interest rate is mainly the subject of discussion. The question is often raised whether saving and retirement provision are still worthwhile for private households, especially in Germany. In this context it is often ignored or not considered that the purchasing power of the nominal interest rates fluctuates considerably with the inflation rate. Inflation-adjusted real interest rates are therefore decisive for the actual income from financial assets and crucial for the savings and investment behavior. This study, therefore, shall play ist part to investigate scientifically the influence and correlation of low and negative key interest rates on yield levels of selected asset classes within the sphere of influence of the European Central Bank. In this context, the mainly populist question is also answered whether savers are expropriated slowly.

German House Prices and the Effect of Monetary Policy

Author: Leisheng Wang

Publisher:

Published: 2014

Total Pages:

ISBN-13:

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German house price has always been relatively quite stable during the last thirty years. However, according to 2013 October German Bundesbank report, housing prices in several German cities could be overvalued by between 5 percentages and 10 percentages. And the Bundesbank warned that this price level cannot be justified based on fundamental factors. Based on the unit root approach, we also detect the existence of rational bubble in German Residential housing market. There might be many reasons behind this overvaluation, but does the loose monetary policy adopted by ECB since 2008 financial crisis contribute to this overvaluation as well? The increase in money supply and the decrease of interest rate, which one plays a more important role for the housing price increase? By focusing on different economic factors that could contribute to house price rising, like stock market index, general household disposable income, GDP, money supply and mortgage rate, we try to analyze their contribution and effects on housing price with the aid of VAR model. The result of the VAR model shows that stock market index, disposable income and mortgage rate all contribute to housing price increase. However, based on Taylor rule, actually, the too low interest rate is the main driving factors for the rapid increase in housing price during last three years. As German monetary policy is largely determined by European Central Bank, it means the price increase might continue in the near future and the risk of overvaluation cannot be ignored.

Book Synopsis German House Prices and the Effect of Monetary Policy by : Leisheng Wang

Download or read book German House Prices and the Effect of Monetary Policy written by Leisheng Wang and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: German house price has always been relatively quite stable during the last thirty years. However, according to 2013 October German Bundesbank report, housing prices in several German cities could be overvalued by between 5 percentages and 10 percentages. And the Bundesbank warned that this price level cannot be justified based on fundamental factors. Based on the unit root approach, we also detect the existence of rational bubble in German Residential housing market. There might be many reasons behind this overvaluation, but does the loose monetary policy adopted by ECB since 2008 financial crisis contribute to this overvaluation as well? The increase in money supply and the decrease of interest rate, which one plays a more important role for the housing price increase? By focusing on different economic factors that could contribute to house price rising, like stock market index, general household disposable income, GDP, money supply and mortgage rate, we try to analyze their contribution and effects on housing price with the aid of VAR model. The result of the VAR model shows that stock market index, disposable income and mortgage rate all contribute to housing price increase. However, based on Taylor rule, actually, the too low interest rate is the main driving factors for the rapid increase in housing price during last three years. As German monetary policy is largely determined by European Central Bank, it means the price increase might continue in the near future and the risk of overvaluation cannot be ignored.

Impact of Public Policy Measures on the German Real Estate Market

Author: Christopher Yvo Oertel

Publisher: Springer

Published: 2015-11-17

Total Pages: 121

ISBN-13: 365811553X

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Christopher Oertel studies the impact of public policy measures on the German real estate market and confirms the assumptions, which imply that a city can influence its economic position in relation to nearby cities in the short run by making use of this tax instrument. His analyses begin with an examination of the German residential real estate market from a consumption good perspective. The findings indicate that the home-ownership allowance had a distorting effect by capitalizing into residential real estate prices, although at lower than expected rates. Then the author studies the German residential real estate market from an investment good perspective. Investigating an important amendment of the German tenancy legislation, there is a positive, yet insignificant relationship between the tenancy law reform act and the development of the cap rate. The analysis is completed by focussing on the German office market and investigating how its rental levels and gross purchase prices are affected by changes in the municipal trade tax multiplier.

Book Synopsis Impact of Public Policy Measures on the German Real Estate Market by : Christopher Yvo Oertel

Download or read book Impact of Public Policy Measures on the German Real Estate Market written by Christopher Yvo Oertel and published by Springer. This book was released on 2015-11-17 with total page 121 pages. Available in PDF, EPUB and Kindle. Book excerpt: Christopher Oertel studies the impact of public policy measures on the German real estate market and confirms the assumptions, which imply that a city can influence its economic position in relation to nearby cities in the short run by making use of this tax instrument. His analyses begin with an examination of the German residential real estate market from a consumption good perspective. The findings indicate that the home-ownership allowance had a distorting effect by capitalizing into residential real estate prices, although at lower than expected rates. Then the author studies the German residential real estate market from an investment good perspective. Investigating an important amendment of the German tenancy legislation, there is a positive, yet insignificant relationship between the tenancy law reform act and the development of the cap rate. The analysis is completed by focussing on the German office market and investigating how its rental levels and gross purchase prices are affected by changes in the municipal trade tax multiplier.

Real estate market in Berlin. Is there any bubble?

Author: Simon Sparber

Publisher: GRIN Verlag

Published: 2016-02-04

Total Pages: 38

ISBN-13: 3668140839

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Bachelor Thesis from the year 2014 in the subject Business economics - Investment and Finance, grade: 2, Free University of Bozen-Bolzano , language: English, abstract: Latterly the capital of Germany alludes to a potential real estate bubble. Does the strong price increase of 73 % on average between 2007 and 2013 really rely on speculative market behaviour or is the trend rather determined by fundamental factors? In order to find this out, the following paper examines several determinants of demand for residential objects through a qualitative analysis. Relevant determinants such as supply of credit, demographic aspects, income and economic growth, real long term interest rates and monetary policy, rent prices, substitution goods as well as the factor of expectations of the future house price development were investigated by means of empirical analysis. Anyways, the unclear result argues in favour of a price increase mainly caused by the fundamental factors. Aim of the thesis is to get a better knowledge on the assessment of bubble existence in housing markets. According to mainstream economics, the process itself is considered relatively difficult. However, an advantage of such a work is that I can eventually use the gained information to implement a real project in the future. In addition, this kind of problem approach could then be used for other markets as well: proving a price increase, finding out how it came about, discovering if its factors consist in a bubble risk or not. Aim of the thesis isn't neither to determine if, how and when a possible bubble will burst, nor examining its effects on the overall economy. From the point of view of a relatively risk averse investor, namely, already the fact that a bubble may exist should be enough reason not to go for an investment in such a market. The reason why I look at a single region instead of an entire country is that plenty of past housing bubbles began to arise in single parts of lands and then eventually expanded to the whole country or even to a whole continent like it happened in the case of the US in 2007. House price dynamics are a local phenomenon, and national-level data conceal crucial economic differences among cities (Himmelberg et al., 2005). This thesis refers to residential properties and not to commercial properties such as office buildings, industrial, retail or restaurants. However, I'm going to put prices of existing properties and new properties together since new buildings only account for a little part in this market (Sparber, 2014).

Book Synopsis Real estate market in Berlin. Is there any bubble? by : Simon Sparber

Download or read book Real estate market in Berlin. Is there any bubble? written by Simon Sparber and published by GRIN Verlag. This book was released on 2016-02-04 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2014 in the subject Business economics - Investment and Finance, grade: 2, Free University of Bozen-Bolzano , language: English, abstract: Latterly the capital of Germany alludes to a potential real estate bubble. Does the strong price increase of 73 % on average between 2007 and 2013 really rely on speculative market behaviour or is the trend rather determined by fundamental factors? In order to find this out, the following paper examines several determinants of demand for residential objects through a qualitative analysis. Relevant determinants such as supply of credit, demographic aspects, income and economic growth, real long term interest rates and monetary policy, rent prices, substitution goods as well as the factor of expectations of the future house price development were investigated by means of empirical analysis. Anyways, the unclear result argues in favour of a price increase mainly caused by the fundamental factors. Aim of the thesis is to get a better knowledge on the assessment of bubble existence in housing markets. According to mainstream economics, the process itself is considered relatively difficult. However, an advantage of such a work is that I can eventually use the gained information to implement a real project in the future. In addition, this kind of problem approach could then be used for other markets as well: proving a price increase, finding out how it came about, discovering if its factors consist in a bubble risk or not. Aim of the thesis isn't neither to determine if, how and when a possible bubble will burst, nor examining its effects on the overall economy. From the point of view of a relatively risk averse investor, namely, already the fact that a bubble may exist should be enough reason not to go for an investment in such a market. The reason why I look at a single region instead of an entire country is that plenty of past housing bubbles began to arise in single parts of lands and then eventually expanded to the whole country or even to a whole continent like it happened in the case of the US in 2007. House price dynamics are a local phenomenon, and national-level data conceal crucial economic differences among cities (Himmelberg et al., 2005). This thesis refers to residential properties and not to commercial properties such as office buildings, industrial, retail or restaurants. However, I'm going to put prices of existing properties and new properties together since new buildings only account for a little part in this market (Sparber, 2014).

Routledge Companion to Real Estate Investment

Author: Bryan D. MacGregor

Publisher: Routledge

Published: 2018-12-07

Total Pages: 359

ISBN-13: 131768785X

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Real estate represents an increasingly significant global asset class and its distinctive characteristics must be understood by investors and researchers. The Routledge Companion to Real Estate Investment provides an authoritative overview of the real estate asset class. The Companion focuses on the current academic research and its relevance for practical applications. The book is divided into four parts, each containing specially written chapters by international experts in the relevant field. The contributors cover the institutional context for real estate investment, the main players in real estate investment, real estate appraisal and performance measurement, and real estate portfolios and risk management. This Companion provides a comprehensive reference for students, academics and professionals studying, researching and working in real estate investment, finance and economics.

Book Synopsis Routledge Companion to Real Estate Investment by : Bryan D. MacGregor

Download or read book Routledge Companion to Real Estate Investment written by Bryan D. MacGregor and published by Routledge. This book was released on 2018-12-07 with total page 359 pages. Available in PDF, EPUB and Kindle. Book excerpt: Real estate represents an increasingly significant global asset class and its distinctive characteristics must be understood by investors and researchers. The Routledge Companion to Real Estate Investment provides an authoritative overview of the real estate asset class. The Companion focuses on the current academic research and its relevance for practical applications. The book is divided into four parts, each containing specially written chapters by international experts in the relevant field. The contributors cover the institutional context for real estate investment, the main players in real estate investment, real estate appraisal and performance measurement, and real estate portfolios and risk management. This Companion provides a comprehensive reference for students, academics and professionals studying, researching and working in real estate investment, finance and economics.

Housing finance in the euro area

Author: European System of Central Banks. Monetary Policy Committee

Publisher:

Published: 2009

Total Pages: 0

ISBN-13:

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Book Synopsis Housing finance in the euro area by : European System of Central Banks. Monetary Policy Committee

Download or read book Housing finance in the euro area written by European System of Central Banks. Monetary Policy Committee and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: