Germany's Housing Market Is Hot. Is It Overheating?
Few Western countries are as conservative about home ownership as Germany, where less than half the country's citizens own property.
German banks have tough lending rules. Would-be buyers are usually asked to provide hefty down payments to secure mortgages, meaning few Germans even think about buying a home until they are settled and financially secure.
But the European debt crisis appears to be changing the traditions around home ownership. The resulting surge in homebuying, some officials warn, is driving prices too high and threatens the nation's economy.
In the trendy Berlin neighborhood of Mitte, real estate agent Anne Riney is showing her client Christian Ehrler a two-bedroom apartment for sale. Ehrler is hoping to buy the $476,000 place with a bank loan covering the full cost.
With such a big loan, he's taking the unusual step of using his parents' home in southern Germany as collateral.
"It's a good thing to invest, and in such a good location, the prices will increase for sure," Ehrler says of his plans. His goal is to get a mortgage with an interest rate lower than 3 percent — less than half the rate his parents paid for their mortgage.
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