In World's Best-Run Economy, House Prices Keep Falling

[darmstadt]

It may account for why German poverty is rising at its fastest rate since the 2nd World War.
Anyway would you rather be a German pensioner with just your pension having to pay rent till you die or a British one with a pension AND a great big stinking honking fooking fat wedge from selling your family home?

And then you die

[minestrone]

Just because they have a successful economy does not mean that they have a well run economy.

[SimonMac]

Yes.

The exact same reason why second hand cars are so expensive in Germany!

[tomtomagain]

Is this not one of the core points being made? Government intervention prevents silly price increases so as properties remain for the purpose of residence not investment.

I rent here, I could buy, but I know I'd not find such a nice place.

Exactly. You wouldn't buy, no one would buy, so the prices keep falling. That's markets for you.

So who owns the houses and what incentive do they have to a) build more and b) maintain the portfolio of existing properties? I remember that at one stage the largest German private landlord was at one stage TerraFirma, the UK private equity group, they bought around 100k properties from a German railway before floating it as Deutsche Annington. Pocketing themselves a tidy sum no doubt.

If the state mainly owns the housing stock then you can simply view paying rent as another form of taxation and if the housing stock are owned by companies then you are paying rent to shareholders. Either way you are not building up your own wealth but redistributing it to someone else. Which is great, if as long as you are the person the wealth is being distributed to.

A friend of mine who lives in Germany did the German thing, rented for 15 years until his mid-late thirties then built his own house. The land cost a lot to buy and the house a reasonable amount to build. Because there is not the market that there is in the UK he's unlikely to be able to move easily should his circumstances change - well not without taking a significant financial hit.


>Government intervention prevents silly price increases

You can argue that it is Government intervention in the UK market that keeps prices high. If we removed planning restrictions we could easily fit a couple million more houses into the South East.


And one more question : Is the rental market linked to the house price? So if house prices have been falling has your rent also been falling? Which should happen in an efficient market as new rental homes are built at a lower cost to the existing stock, putting a downward pressure on rents.

I do find the differences between markets interesting. I don't think one is right and the other wrong, just different. Or put another way neither model is right all of the time.

[scooterscot]

And one more question : Is the rental market linked to the house price? So if house prices have been falling has your rent also been falling? Which should happen in an efficient market as new rental homes are built at a lower cost to the existing stock, putting a downward pressure on rents.

Here in Munich I don't think there's any connection. We've been renting the same place at the same price for the past 5 years. In that time foreign investors, like London, have bought up half the city.

[tomtomagain]

In that time foreign investors, like London, have bought up half the city.

And why not! Low asset prices and a decent, steady yield. In a world awash with paper money what's not to like?

[Eirikur]

Exactly. You wouldn't buy, no one would buy, so the prices keep falling. That's markets for you.

So who owns the houses and what incentive do they have to a) build more and b) maintain the portfolio of existing properties? I remember that at one stage the largest German private landlord was at one stage TerraFirma, the UK private equity group, they bought around 100k properties from a German railway before floating it as Deutsche Annington. Pocketing themselves a tidy sum no doubt.

If the state mainly owns the housing stock then you can simply view paying rent as another form of taxation and if the housing stock are owned by companies then you are paying rent to shareholders. Either way you are not building up your own wealth but redistributing it to someone else. Which is great, if as long as you are the person the wealth is being distributed to.

A friend of mine who lives in Germany did the German thing, rented for 15 years until his mid-late thirties then built his own house. The land cost a lot to buy and the house a reasonable amount to build. Because there is not the market that there is in the UK he's unlikely to be able to move easily should his circumstances change - well not without taking a significant financial hit.


>Government intervention prevents silly price increases

You can argue that it is Government intervention in the UK market that keeps prices high. If we removed planning restrictions we could easily fit a couple million more houses into the South East.


And one more question : Is the rental market linked to the house price? So if house prices have been falling has your rent also been falling? Which should happen in an efficient market as new rental homes are built at a lower cost to the existing stock, putting a downward pressure on rents.

I do find the differences between markets interesting. I don't think one is right and the other wrong, just different. Or put another way neither model is right all of the time.

The social renting sector is much much larger, there's not so much private renting in Germany. This explains why rent is not fully connected with house prices

[tomtomagain]

Another factor would be population growth.

A country with a declining population would see a reduction in demand for housing. And therefore should see a drop in prices for homes.

[lilelvis2000]

It may account for why German poverty is rising at its fastest rate since the 2nd World War.
Anyway would you rather be a German pensioner with just your pension having to pay rent till you die or a British one with a pension AND a great big stinking honking fooking fat wedge from selling your family home?

Only because you have eaten your young. BTW where do you live after selling it and buying a Aston Martin?

[Euler]

Only because you have eaten your young. BTW where do you live after selling it and buying a Aston Martin?

In a smaller house costing just over a million.