Why are there no real estate bubbles in Germany?

whiteonion

You blame cheap credit on the real estate bubble in Ireland but why was there no real estate bubble in Germany? Germany is very crowded compared to Ireland, yet rent is cheaper and houses are cheaper. How come there hasn't been a real estate bubble in Germany?

Are Germans more rational than Irish people? The answer is most likely yes.

OutlawPete

Cause they spend all their money on porn and sauerkraut.

W.Shakes-Beer

whiteonion wrote: »

You blame cheap credit on the real estate bubble in Ireland but why was there no real estate bubble in Germany? Germany is very crowded compared to Ireland, yet rent is cheaper and houses are cheaper. How come there hasn't been a real estate bubble in Germany?

Are Germans more rational than Irish people? The answer is most likely yes.

Case solved.

holystungun9

Porn - yes, more rational -yes, also don't forget that it is more common to rent long term than buy you own place. We are pretty obsessed here about owning our own place. (and sticking a wall or fence around it)

Pauleta

There isnt an obsession in Germany to own their houses. Developers here, were building house and apartments to make fast money purely from sales. In Germany they built houses and apartments with a long term strategy to make money from sales and rents.

Turtyturd

It's down to Walmart.

whiteonion

Pauleta wrote: »

There isnt an obsession in Germany to own their houses. Developers here, were building house and apartments to make fast money purely from sales. In Germany they built houses and apartments with a long term strategy to make money from sales and rents.

For a society it's better if most people are renters instead of owners. This makes the workforce much more mobile and they will be able to move where there is work.

Here in Ireland people can't move because they are stuck in a house in NE.

Dj Stiggie

I'm living in Berlin right now and its very rare for someone to own a place. Its also very common to live in a flat-share, so there's never a huge demand for somewhere to buy.

Most of my friends here, who are from all across Europe, have no desire to own a house, and don't see rent as dead money. Plus Germans seem to move a lot, so buying somewhere doesn't make sense to them.

aligator_am

OutlawPete wrote: »

Cause they spend all their money on porn and sauerkraut.

From what I've seen, they sure as fook ain't spending it on ladyshaves!

cson

whiteonion wrote: »

You blame cheap credit on the real estate bubble in Ireland but why was there no real estate bubble in Germany? Germany is very crowded compared to Ireland, yet rent is cheaper and houses are cheaper. How come there hasn't been a real estate bubble in Germany?

Are Germans more rational than Irish people? The answer is most likely yes.

Because the Irish Dream of a one off two story house in the middle of the countryside isn't quite as prevalent there. That and the fact they probably don't have as deep rooted a fear of rent being 'dead' money which we're so fond of in Ireland.

Owning a house or land is really a huge thing over here.

oppenheimer1

Germans don't have a tradition of owning, they rent.

whiteonion

cson wrote: »

Because the Irish Dream of a one off two story house in the middle of the countryside isn't quite as prevalent there. That and the fact they probably don't have as deep rooted a fear of rent being 'dead' money which we're so fond of in Ireland.

Owning a house or land is really a huge thing over here.

So Irish people are basically irrational?

Saila

because they lent all their savings to us

KerranJast

whiteonion wrote: »

So Irish people are basically irrational?

Pretty much. Most sociologists blame the Famine and the horrible effects of subdivision. It's ingrained in Irish people's psyche that you have to own land/a house to be self sufficient.

amacachi

They understand and accept graphs like this: http://thismatter.com/money/real-estate/images/mortgage-payments-interest-principal-portions.gif
For all the "rent is dead money" rubbish there's a fair amount of "dead money" paid particularly at the start of a mortgage.

geetar

there is an actual reason besides porn and saurkraut.

they had a housing boom in the nineties caused by incredibely low tax incentives following the reunification of germany in a bid to get things moving. the tax incentives ceased, and the prices fell. they were well sobered to the concept of a bubble, and their housing market had a correction and remained stagnant for the last decade or so.

so enough of this anti-irish blah blah we're so crap stuff. its feckin depressing reading the same stuff every day. there's logical reasons for everything, we are all human. hopefully like germany we will have learned from our mistakes.

holystungun9

whiteonion wrote: »

So Irish people are basically irrational?

essentially yes, we are complete lunatics (but shur aren't we great craic?)

cson

whiteonion wrote: »

So Irish people are basically irrational?

No, not at all.

My uneducated guess would put it down to sociology. It's not that long ago that land was a huge issue in this country with the land wars, you're talking maybe 5 generations or so, thus it wouldn't be a stretch to say the love of ownership stems somewhat from that and the plantation era. It gets passed on from generation to generation. I know my parents always say to me that it'll be a great time to buy a house when I start working - operative word being buy. You can multiply that across the board and you can see how ownership is such a huge deal in Ireland, its how we were brought up. That and the Irish Dream thing I referred to in my post above - we all want the two story semi-mansion on 2 acres out in the beautiful countryside, well most people do. You just don't see that type of one off housing on the continent in my experience. It's intrinsic to Ireland.

Seeing as this is AH, for the tl:dr's -> It's the Brits fault.

TheUsual

Saila wrote: »

because they lent all their savings to us

Then they built 50,000 euro BMW's for people to pose around Dublin in.

Smart people aren't they ? Got us twice.

cson

geetar wrote: »

so enough of this anti-irish blah blah we're so crap stuff. its feckin depressing reading the same stuff every day. there's logical reasons for everything, we are all human. hopefully like germany we will have learned from our mistakes.

We're like a crack addict [kind of intended pun]; the highs are very high and the lows are very low. We were the best country in the world 5 odd years ago and weren't shy to shout it, now we're the worst and we aren't slow to bemoan it. :P

Cavehill Red

Ah, doncha just love simple national stereotypes?
Of course there have been real estate bubbles in Germany. The most recent was post-unification, when Western investment flooded into the East, shooting up prices and leading to a developer free-for-all which means that even today, two decades or more on, there are hundreds of thousands of vacant properties across Eastern Germany. Check how many vacant apartments there are in Berlin alone if you don't believe me.
Also, Germans did plug into the recent bubble in a big way, but it just didn't manifest in their domestic market. They bought in Spain, Bulgaria, Turkey. They bought the bonds that were basically repackaged mortgages from countries like Ireland. They bought these because there was no return on domestic property.
Finally, it's worth considering how bubblicious a property market can get when the price of a two bed apartment is already half a mill to begin with. In a country with generally high property values and multi-generational mortgages, there isn't much upside left for a bubble to take hold. Bubbles require a low base to commence from. They proceed upwards towards value, then overshoot as human exuberance takes hold.
But hey, let's run with the 'Smart Germans, Silly Paddies' theory. It's so much easier.

whiteonion

Cavehill Red wrote: »

Ah, doncha just love simple national stereotypes?
Of course there have been real estate bubbles in Germany. The most recent was post-unification, when Western investment flooded into the East, shooting up prices and leading to a developer free-for-all which means that even today, two decades or more on, there are hundreds of thousands of vacant properties across Eastern Germany. Check how many vacant apartments there are in Berlin alone if you don't believe me.
Also, Germans did plug into the recent bubble in a big way, but it just didn't manifest in their domestic market. They bought in Spain, Bulgaria, Turkey. They bought the bonds that were basically repackaged mortgages from countries like Ireland. They bought these because there was no return on domestic property.
Finally, it's worth considering how bubblicious a property market can get when the price of a two bed apartment is already half a mill to begin with. In a country with generally high property values and multi-generational mortgages, there isn't much upside left for a bubble to take hold. Bubbles require a low base to commence from. They proceed upwards towards value, then overshoot as human exuberance takes hold.
But hey, let's run with the 'Smart Germans, Silly Paddies' theory. It's so much easier.

Can you provide me with a chart that proves there was a bubble in German real estate? I myself have never seen any evidence of this.

Cavehill Red

whiteonion wrote: »

Can you provide me with a chart that proves there was a bubble in German real estate? I myself have never seen any evidence of this.

www.iwh-halle.de/d/publik/disc/11-09.pdf

Sonnenblumen

whiteonion wrote: »

You blame cheap credit on the real estate bubble in Ireland but why was there no real estate bubble in Germany? Germany is very crowded compared to Ireland, yet rent is cheaper and houses are cheaper. How come there hasn't been a real estate bubble in Germany?

Are Germans more rational than Irish people? The answer is most likely yes.

Economies of scale. Nothing to do with 'rational'. It would take many bubbles to come close to match the damage caused by 2 x WWs. Does that prove your theory? I think not.

geetar

whiteonion wrote: »

Can you provide me with a chart that proves there was a bubble in German real estate? I myself have never seen any evidence of this.

look at post reunification germany. the government encouraged low taxing to get the property market and investors moving. it all happened in the nineties. germany even had a recession in 2001. they were one of the few western countries not to have a housing collapse in the last few years because their markets already had a correction.

whiteonion

OK, there was a real estate bubble in parts of Germany but that seems to be more of a regional thing. It didn't get so crazy like in Ireland or Japan where the entire economy was ruined.

strobe

A distinct lack of Lebensraum, I have been led to believe.

Cavehill Red

whiteonion wrote: »

OK, there was a real estate bubble in parts of Germany but that seems to be more of a regional thing. It didn't get so crazy like in Ireland or Japan where the entire economy was ruined.

Well, that depends on how you look at it. A million empty apartments for two decades and a massive subsidy and demolition policy are hard to ignore.
And East Germany isn't a region so much as half the country. Germany's economy was badly affected by it, just as Japan's was, but both countries recovered due to their manufacturing base and export-driven economies. Germany further benefited from being able to set the euro interest rates to suit their (and France's) economies at the expense of smaller eurozone economies like Ireland or Greece, who required higher interest rates just as the ECB was slashing them to near zero.

geetar

whiteonion wrote: »

OK, there was a real estate bubble in parts of Germany but that seems to be more of a regional thing. It didn't get so crazy like in Ireland or Japan where the entire economy was ruined.

yeah id agree with that. it would seem the german government made the bubble to help boost their economy, whereas our government just relied on the bubble like a crutch

Morag

There are long term leases in Germany from 3 to 20 years, we don't have that and there are multi genertional houses which people move back into once they start having kids.

Wibbs

This is real crayons in kindergarten join the dots stuff, even for a sub bridge dweller like yourself, trying to get some here to "admit" the Irish are irrational. Stormfront eager for new members are they?

Germany has a much bigger population. This tends to put the breaks on madness in general. Like ecosystems in nature, the bigger they are the less vulnerable they are to environmental change. It's got nothing to do with "national" rationality or not. In any event there are enough examples of German rationality gone askew to fill this thread with debate.

Lauder

There is no real culture of property investment in German (both commercial and resi).

For example, real returns on German commercial property is actually negative (approx -1.5% since 1970). Development is the main driver there. But a very different culture and unique (apart from Switz). Austria, strangely enough, performs well.

3greenrizla's

I was told that Germans really do not like Debt of any kind and this attitude stems back to the bill they were left with for cleaning up Europe after WW1

http://www.spiegel.de/international/germany/0,1518,720156,00.html
The sum was initially set at 269 billion gold marks, around 96,000 tons of gold,

based on Cash for Gold's €23.37 per gram that would work out at €2035287107884.80 (is that billions or trillions?)

However deals can be done....

reduced to 112 billion gold marks by 1929, payable over a period of 59 years.

Killer Pigeon

Hitler and the Nazis didn't like property bubbles.

Lauder

3greenrizla's wrote: »

I was told that Germans really do not like Debt of any kind and this attitude stems back to the bill they were left with for cleaning up Europe after WW1




based on Cash for Gold's €23.37 per gram that would work out at €2035287107884.80 (is that billions or trillions?)

However deals can be done....

Read recently, that (per capita) the Irish debts exceed German post WW1 reparations. Scary. - but i imagine inaccurate, poor journalism!

Cavehill Red

Cash for Gold's per gram rate is less than 50% of the current spot price. So double those figures for starters.
Last figure I heard for Ireland's per capita debt (re the deficit and bank liabilities) was c. 170,000 euro each, man, woman and child. Obviously, total national debt is greater, due to mortgages, loans, credit cards, etc.

Spunge

Hurr durr irish are so dumb ecks dee

jimmycrackcorm

Who pays for the German pensioners rent? What do the Germans leave as inheritance assets to their children?

whiteonion

jimmycrackcorm wrote: »

Who pays for the German pensioners rent? What do the Germans leave as inheritance assets to their children?

I would assume that the income they get from their pensions help them pay their rent. I've seen apartments in Berlin for 300-400 euro per month. So two pensioners living in a one bedroom apartment should not break their backs financially.

Cavehill Red

jimmycrackcorm wrote: »

Who pays for the German pensioners rent? What do the Germans leave as inheritance assets to their children?

1. Themselves or the Government.
2. The rest of the mortgage, or gold, silver, and investments.

peasant

For very simple reasons:

Not enough available land to start a building frenzy
Very strict building regulations
High cost of building
Highly regulated rental market, yielding low returns

In short, it's almost impossible to make a quick buck by building (or just buying and selling). Prices never jump, only creep ...so do profits.

Property speculation is about as lucrative as an average savings account.

jimmycrackcorm

Because they are happy to rent. Saying anything else is pointless.

jimmycrackcorm wrote: »

Who pays for the German pensioners rent? What do the Germans leave as inheritance assets to their children?

A German pensioners rent is probably paid for by savings not spent on a mortgage.
Who the fuk wants inheritance.. It's a load of cock for lazy fukers. I've told Mam fifty times to tell the house and go enjoy herself instead of worrying about us.

Apanachi

Dj Stiggie wrote: »

I'm living in Berlin right now and its very rare for someone to own a place. Its also very common to live in a flat-share, so there's never a huge demand for somewhere to buy.

Living in Berlin right now too and agree with Dj Stiggie is saying, very few people I know own their own house/appartment

jester77

There are a lot of reasons that can be factored into this, such as.

• Germans don't like taking out loans or having debt - try using a credit card here, most place won't take it. If the Germans want something they will generally save for it.
• No minimum wage - a lot of people just couldn't afford a mortgage
• Movement of people - not unusual that people will move a lot for jobs within their work lifetime. Germany is too big to commute, doesn't make sense having a house in Berlin and working in Frankfurt.
• Strong rental rights - the renter has a lot of rights, you can't just throw them out even if you want to sell the place.
• Good quality empty apartments - Apartments are built to a good standard here and most come unfurnished so you are free to do it up whatever way you please making it feel like a real home.

Freddie59

From 2007.

Mr Benevolent

jimmycrackcorm wrote: »

Who pays for the German pensioners rent? What do the Germans leave as inheritance assets to their children?

Why do children need inheritance assets?

Dyr

jimmycrackcorm wrote: »

What do the Germans leave as inheritance assets to their children?

They're probably smart enough not to be obsessed with such nonsense about their kids. Maybe its because the germans have an equitable education system.

I dunno, I think there was a generation or two of irish people who were obsessed with keeping up the murphys'.

Apanachi

What is this latest obsession with a lot of Irish (at least the ones here on Boards) to constantly compare Ireland to Germany? There is no comparison - Germany is totally different. Ireland has only recently developed as a country, let's be honest we were living in the dark ages until recently, we were always the poorhouse of Europe, we had no Industry (OK still don't) Germany had an abundance of raw materials a huge workforce all leading them to be more industrial and richer, Ireland on the other hand had nothing and the little we had was taking from us, causing our youngest and strongest to leave the country during the famine.

Germany has a long cultural history (I'm talking fine arts and music, not our mystical culture of Pookas, Leprechauns and Banshees.)

Losing so much has made us want to hold on to what little we had and when we entered the boom, the natural instinct was to grab what we could take (and to be fair, the banks made it damn easy too)

I am one of the relatively few people living in Germany that built a house here, but that may just be the Irish in me that wanted to own something of my own (that and the most of the landlords I ever dealt with here were greedy gold diggers )

As far as the German pensions go, a lot of old folks are living in poverty and it will get worse before it gets better. Workers in Germany are obliged to pay pension insurance, (and not to little either), the problem is, the money the Government collect from this insurance is running out as it the savings had been used for other things, so despite having paid insurance your whole life, when you reach the age of pension, you're pretty much f***ed unless you have other savings or a private pension, I know an astonishing number of people who are 65 and older who have to go to work to be able to afford to live (for example; my Father-in Law's sister is 72 and is still working full-time and my ex's parents (67 and 68 years old) clean apartments for tourist in the Summer months)
Also, they have recently raised the age at which you become a pensioner, people born before 1964 get their pension at 65, everyone born after that has to wait until they're 67 and there's talk of raising it by a further 2 years, meaning my children will be 69 before the get their pension.
In recent years, the amount of people who have singed up for private pensions has risen astronomically. The money for the pensions that are being paid out now comes from people like me who pay their taxes and insurance over here, the main problem is however, people are having less and less children and the population is getting older, meaning less people on the workforce paying for an increasing number of pensioners

Caoimhín

whiteonion wrote: »

So Irish people are basically irrational?

I think it has more of a historical influence. It was only a few generations ago that most Irish didnt own their homes or farms, had to pay rent to greedy absentee British landlords or were evicted.

It is not unsurprising at all that there is a desire to own the house you live in for the Irish.

bnt

whiteonion wrote: »

You blame cheap credit on the real estate bubble in Ireland but why was there no real estate bubble in Germany?

You got that backwards. I blame the real estate bubble on cheap credit. There was much less of that in Germany due to regulatory control of banks. The rules there were (and are) so restrictive that some German banks actually moved operations to other countries so that they could operate in those countries e.g. DEPFA Bank moved their headquarters to Dublin and loaned a lot of money to both American and Irish developers. It did not go well, and they had to be folded in to Hypo Real Estate.

red menace

Bah got excited there
Thought Whiteonion was back