germany steps up crunch fighting good news for property investors
News Posted On: 27 August 2009
Germany is stepping up efforts to make sure that its second quarter growth can be maintained. The finance minister has said that the government is considering giving low rate state loans among other a range of measures aimed at helping cash-strapped businesses to weather the credit crunch, which would hamper Germany's recovery. Other measures mentioned include state export guarantees, and government help for credit insurers.
"If the efforts of banks are not sufficient to supply the economy with enough fresh cash, the state will have to make use of other measures," Peer Steinbrueck told the Handelsblatt business daily in an interview.
"This includes putting the [state-owned development bank] KfW in a position to give loans to banks with the clear condition that the low interest rates are passed completely and verifiably on to the companies," he said.
Germany's property market lives or dies on the strength of the economy, because Germany has one of the lowest rates of home-ownership in industrialised Europe, and the government restricts residential rental rates to prevent people from being priced onto the streets. Thus, when Germany is doing well economically, wages are increased and rents can be increased, when it is doing poorly rents are almost completely frozen.
Germany's rental markets are very much driven by residential lets, but because of the prevalence of renting, buyers find that their rental income, though it may be low is stable and secure. In terms of capital appreciation Germany has never posted spectacular figures, investors buy with a long-term strategy; knowing they have the security of the steadily growing rental income, while they wait 10 or even 20 years to make some capital gains.
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