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Germany studying tools to fight property bubbles, Dombret says

Wednesday, January 28, 2015 - 23:21
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German financial regulators are studying tools that can be used to fight potential real-estate bubbles as liquidity measures by the European Central Bank increase the risk of escalating asset prices.

[FRANKFURT] German financial regulators are studying tools that can be used to fight potential real-estate bubbles as liquidity measures by the European Central Bank increase the risk of escalating asset prices.

Germany's financial stability committee plans in coming months to recommend that the government create the legal framework for putting such tools to use, Bundesbank board member Andreas Dombret said in the text of a speech in Berlin on Wednesday.

"Even if the risks on the property market seem slight at the moment, we still have to prepare for all eventualities," he said. "The world has become a bit more dangerous for real- estate investors."

The European Central Bank said on Jan 22 that it'll buy 60 billion euros (US$68 billion) of bonds every month through September 2016 in a push to put more cash into circulation and revive euro-area inflation. The measure was announced against opposition led by German officials in the Governing Council.

German home prices rose 5.1 per cent in 2014, for the sharpest increase since 1993, according to researcher Bulwiengesa AG. Buyers, including private individuals and investment firms, are crowding into German real estate as a way to earn higher returns amid record-low interest rates in fixed- income markets.

BLOOMBERG