Abstract
The real estate industry is one of the most important sectors of Germany. Its development and the development of real estate values are most important to Germany’s economic business cycle and the country’s long-term growth path. On average, Germany’s real estate activities and price trends have stagnated more or less since the mid-1990s until 2006 and thus deviated from the international pattern. The underlying structural differences include, amongst others, the demographic development, the characteristics of the German real estate finance system, the fiscal policy and a decade-long low and stable general inflation. In return, the real estate sector in Germany—particularly when compared to other countries—serves rather a stabilizing function, especially in periods of economic slowdowns.
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- 1.
Data Source: Federal Statistical Office (Destatis), National wealth accounts (2013).
- 2.
On the considerable influence of the real estate economy on the economic situation in general, see Leamer (2008).
- 3.
Canada manifested a stagnating price trend that more or less matches the German curve. Japan has been subject to a recessive price trend for some time now.
- 4.
Cf. Chapter 9 in Institut der Deutschen Wirtschaft Köln et al. (2013).
- 5.
The stats for the time between 1976 through 2009 (with the year 1990 omitted because of the interruption of the data series during that year) reflect a similar situation: The mean general inflation rate for Germany approximated 2.4 %, while the inflation rates for building services in construction for single- and multi-family homes, operational office and business buildings averaged a rate between 2.8 and 2.9 %. The average price increase for the maintenance of apartment blocks equalled 3.1 %, and the increase for zoned land was 6.9 %.
- 6.
- 7.
That being said, it should be added here that another solution for debt-ridden public households is to raise taxes. For the sakes of efficiency, it is preferred to levy taxes on goods of inelastic demand and/or supply.
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Maennig, W. (2017). Size and Impact of Real Estate Sector and Its Role for Business Cycles and Growth. In: Just, T., Maennig, W. (eds) Understanding German Real Estate Markets. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-319-32031-1_2
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