And our survey currently sounds something of an “all-clear” for Germany. We see no farreaching loosening of credit standards or conditions. If these were significantly softened, this would point to the emergence of a housing bubble capable of threatening financial stability. But we have found no sign of that.
Affordability has begun to improve again due to lower house prices and changes to stamp duty and mortgage interest relief. The combination of higher rents and improvements in affordability may already be bringing the relative costs of buying and renting closer, helping to re-establish equilibrium in the market.