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About Hutcho

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  • Location Munich
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  1. Bavaria and the real estate bubble

      227k EUR for the one bed apartment they're talking about in the article, in a suburb 30km out of town.  So the equivalent of Gemering maybe.  Sounds like a bargain to me.  Here's a one bed apartment in Gemering, but old, not new like the ones in Vancouver.  Nothing special, almost 100k more than in Vancouver and that's before costs.   That's how crazy Munich is.
  2. Bavaria and the real estate bubble

    I think there is a bubble, but it's not a bubble that will burst rather just deflate slowly.  Like you and mtbiking rightly point out, people are getting these super low interest rates and locking them in for 15, 20 or even 30 years.  You can currently get a 750,000 euro loan, locked in for 15 years at a cost of a bit over 2000 euros a month.  For a lot of people, that seems like a good deal, because they can spend a million on a house or apartment and pay about the same as they do right now, but don't have to worry about a landlord and have their "rent" locked for many years and at the end will own something (or part of something at least, most people are likely not paying back 750k in 15 years).   Once interest rates go up, prices will come down somewhat because people will not be able to afford 750k loans anymore and as such, demand will drop.  However, supply will also probably drop because people won't want to sell their property because they are locked into a sweet interest rate and are under no pressure to sell because their rates aren't going up.   This is very different to places like the UK/Australia/US where people usually have variable rate loans.  When the interest rate doubles, most people can't afford their mortgages anymore and must sell.  That is what causes the bubble to burst. I can't imagine prices going much higher, because purchase prices in Munich are one of the highest in the world right now, but I don't think it'll drop much either in the short/medium term.