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Reuters
Figures from the European Union's statistics agency show 52.5 percent of Germans lived in their own home in 2014, well below the EU average of around 70 percent. But this is sharply up from 2006 when, according to separate data from the German Federal Statistics Office, the level was about 42 percent.
Strong demand for homes is fuelling a construction boom that is helping to support the German economy while exporters, who traditionally drive growth, struggle due to a slowdown in some of their major markets such as China.
In the last three months of 2015, construction was one of the biggest growth contributors while net trade was a drag. In the first two months of 2016, building investment further increased, raising hopes of a strong first quarter.
However, concerns are growing that a property bubble may be inflating at least in some cities. If it bursts one day - a scenario that could be created by rising interest rates, higher unemployment and changing demographics – owners and lenders alike could be hurt, posing a risk to medium-term growth.
A shortage of affordable housing is also forcing poorer families out of cities, widening the social gap in one of Europe's richest societies and raising tensions after a record one million migrants arrived last year alone.
BENEFITING FROM THE BOOM
So far, Sebastian has benefited from the boom. After studying in London and Boston where rent ate up a large part of his scholarships, he returned to buy a 100 square meter (1,100 square foot) apartment in Berlin's then up-and-coming Wedding district. For the 120,000 euro ($135,000) purchase, he borrowed 100,000 euros in 2010 on an interest rate of 3.8 percent. |
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