Sunday, December 14, 2008

German housing

Some thoughts on the German housing market:

* They didn't experience a bubble (certainly nothing comparable to the UK/US craziness).This was largely a consequence of "old-fashioned" mortgage practices.

* Yet, despite these more restrictive mortgage practices, the fact of the matter is that Germans, at essentially all levels of society, live in better houses than Brits. That is: rich Germans have nicer houses than rich Brits; ditto the middle-class and poor. Comparisons with the US are harder, because the countries are so very different in their use of space and living habits. But I don't think anyone would disagree that German homes are better built.

* This may come as a surprise if you read enough of the business press in the Anglo world, but the purpose of housing markets is to give people somewhere to live.

* So let's get this straight, leaving out any economic jargon: Germans live in better homes, while paying less, and experiencing less volatility in house prices. How is this possible? Simple: good mortgage rules, regulations regarding build quality and schemes to make sure there are enough professionally trained builders. This is not rocket science.

* Do we in the UK and US perhaps have something to learn from them in this instance?

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