Ok, I know I am going to get the brickbats, but in the best run economies of the world, RE prices go up at a rate much LESS THAN inflation. In fact in Germany the prices of houses have fallen in REAL TERMS over a 30 year period.

Why is it so? It is because the Government keeps increasing the supply of houses and interferes in the price at which transactions happen. Needless to say all transactions are through the bank so the Government knows at what prices transactions are happening.

So read on….here is an old article (2014) but still very relevant to know how the German housing market functions. We can just feel terrible about what is happening…but yes read and ….burn!!

https://www.forbes.com/sites/eamonnfingleton/2014/02/02/in-worlds-best-run-economy-home-prices-just-keep-falling-because-thats-what-home-prices-are-supposed-to-do/2/#3301cf631879

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  1. Sanjay Singhaniya

    The german laws are designed that way. Since in India there is builder-political nexus, forget such laws getting implemented in India.

    Also, note that german government is ready to release the land for development. Whereas in India, the land is given away to squatters or builder hoard it.

    Also, there is a reason that India is still a developing nation, right? Look at roads in Mumbai. You can just guess how much corrupt the system is which has roads with potholes in most money making municipality in India.

    The laws in Germany are best explained by following paragaph :
    “A key to the story is that German municipal authorities consistently increase housing supply by releasing land for development on a regular basis. The ultimate driver is a central government policy of providing financial support to municipalities based on an up-to-date and accurate count of the number of residents in each area.

    The German system moreover is deliberately structured to encourage renting rather than owning. Tenants enjoy strong rights and, provided they pay their rent, are virtually immune from eviction and even from significant rent increases.”

  2. I am living in Germany for the past 5 years and this article from forbes makes little sense now. the market is extremely bullish and people are desperately looking to buy apartments or houses. the prices have gone up significantly in the past 2.5 years. The reason attributed is the lowest interest rate (around 2 %). There are many immigrants who are interested in buying an apartment or house. This is alos another factor.

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