Germany is increasingly concerned about a possible property price boom after foreign investment has pushed prices up.
The strong economy has lured foreign investors, who are now being blamed for prices in major cities becoming overvalued by as much as 20%.
The warning comes from a report from the Bundesbank, the country’s central bank, which says soaring property prices are “difficult to justify”.
In popular cities such as Berlin, Munich, Hamburg, Cologne, Frankfurt and Stuttgart, the price of apartments and flats had risen by 25% on average since 2010.
Overall, prices across the nation have gone up by an average of 8.25% in just three years.
The jump in prices could “give rise to fears of a broad-based property price boom”, the report says.
But the Bundesbank does not believe that the price hike will lead to financial instability.
