The German housing market does not currently have a price bubble. The current price gains have not been financed using credit, but were triggered by portfolio rebalancing. Lawmakers and regulators have numerous ways and means of managing supply and demand and intervening to prevent a bubble from developing, if necessary. We, therefore, regard the German housing market as an ideal investment environment. [more]

The bubble in the US real estate market has virtually disappeared. Prices are back in a range that makes economic sense. Affordability, measured as the ratio of house prices to income, has returned to pre-crisis level. Foreclosures and unemployment, while still high, are beginning to fall, but risks remain nonetheless. [more]

The euro area real estate price bubble burst with a delay of one to two years after the US. Adjustment is most advanced in Ireland, followed by Spain. Prices have hardly adjusted in France, Netherlands, and Belgium. Markets in Italy and Portugal seem to have escapedsignificant over-valuation. The exception to the general picture of overvalued markets is Germany, where fundamental values remain at historical lows despite some price increases in recent years. [more]