German property market surging, with homes in big cities 15-30% overpriced, Bundesbank says

Frankfurt

HOMES in large German cities are between 15 and 30 per cent overpriced, the Bundesbank said on Monday, in a message that is likely to stoke further fears in Europe's strongest economy about the side-effects of monetary stimulus.

The German economy will stay on a strong footing in the coming months thanks to high industrial and construction activity, the central bank said, but it warned that this could not fully account for the surge in residential property prices.

"According to current estimates, there were price overshoots of between 15 and 30 per cent in the cities last year," the German central bank said in its monthly report. "The deviations in prices were particularly pronounced in the case of owner-occupied apartm…