The collapse of the capital markets in the autumn of 2008 started the Euro zone crisis phenomena. The main cause can be found in a capital-deficit and inadequate liquidity buffers in the global banking sector, and worldwide enormous support to the governments were needed to stabilise the financial system and stimulate the real economy with loans between 2002 and 2008. The globalisation of the finance system and the real estate bubbles can be recognised as other significant factors which brought the Western economy to this point. The crisis has affected several sectors of the market in almost all European countries. These effects are likely to go further if the governments won’t take any important measures.
However, low interest rates have encouraged investors to invest in a business which is inflation-resistant: in 2009, when the crisis was at its highest level, the nominal prices of real estate assets rose only in Germany and 3 other countries in the Economic and Monetary Union. One of the reasons was the rising risk of premiums for foreign investment.
In general, the prices of real estate in Germany have been increasing since the beginning of the crisis: e.g. since 2009 the apartment building prices increased by 6.4%, and even doubled in big cities like Munich (12.6%) and Hamburg (11.2%), just in the last year.
As a consequence of the financial and economic crisis in 2007/2008, the Basel Committee on Banking Supervision precautions initiated the “Basel III” (global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, and scheduled to be introduced from 2013 until 2018). The aim of the proposed financial market regulation is to make the banking world less vulnerable to the crisis, to provide a stable supply of credit and to stabilize the real economy. The extensive regulatory measures will have an impact on the real estate financing, and thus on the German housing and real estate industry.
Source: http://www.bmvbs.de/cae/servlet/contentblob/93186/publicationFile/65004/immobilien-und-wohnungsmarkt-bericht.pdf
