House price rises of a little over 5 per cent would barely make the Federal Reserve, or the Bank of England, blush. Not so at the Bundesbank.
This is what Jens Weidmann, Bundesbank president, had to say back in March:
Jens Weidmann: We will see inflationary pressures rise in Germany. We already see that partly in some markets, such as real-estate. House prices increased by 5.5 per cent last year, which is not impressive by London standard, but still for Germany is something that we will need to watch.
The house price boom has gathered pace. The most recent data from the OECD shows that German house prices rose 9.5 per cent in the year to Q1.
Mr Weidmann has signalled that Buba will act if it thinks the boom is getting bubblicious, possibly through macroprudential measures such as limits on loan-to-value ratios, which cap the amount mortgage holders can borrow against the value of their property.
Klaus Baader at Société Générale is more relaxed, however. Read more