EU Risk Council sees overvaluations on the German real estate market

Frankfurt Germany is not acting fast enough to combat exaggerations in the real estate market. This is the conclusion of the European Systemic Risk Board (ESRB). That is why the EU risk monitors have sent a letter to the responsible federal ministries in Berlin, in which they are calling for specific countermeasures.

In its report, the ESRB warns that estimates indicate high and rising overvaluation of house prices in Germany. This applies to both cities and rural areas.

Although the federal government created the legal framework in 2017 to prevent excesses on the real estate market with instruments such as loan-to-value ratios and minimum repayments, none of these instruments have been used to date. The ESRB therefore recommends introducing measures that affect both borrowers and banks.