Real estate prices for housing in Munich have been rising continuously over the past decades and we have written about rents and real estate prices in the Bavarian capital on multiple occasions. Experts have always said that there was no threat of a real estate bubble in Munich, today, July 12, 2016, merkur.de brings some different news.

According to economist Roland Döhrn from the Institute for Economic Research (RWI) in Essen, real estate prices in some regions of Germany have been showing explosive developments. A report by the institute shows such developments in Hamburg and Hannover in the north of the country, while in the south, Munich and other parts of Oberbayern are affected. The report identifies such development only in family house prices, not for apartments.

The research was based on the developments of real estate prices shown at the real estate portal Immobilienscout24 and on data coming from the Federal Statistics Office. Prices for houses have risen by 5.1 per cent in 2015 and the rise in prices continues this year. The Institute came to the conclusion that a bubble was forming because prices for houses developed differently from trends in the past.

In an 18 months-old report by the same Institute, the conclusion was that the German real estate market is not showing any signs of a bubble in prices.

A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets, typically following a land boom. A land boom is the rapid increase in the market price of real property such as housing until they reach unsustainable levels and then decline in a bubble.