There are many news reporting high inflation in Europe in general: food, fuel, and so on. But, how bad are the money shots in real estate prices in Germany? this is very serious. This fresh credit and money printing via the ECB's balance sheet expansion is doing a very pernicious effect, i.e., raising prices, which reduces competitiveness. Merkel knows this well, and knows that this inflation and these money shots are not what Germany needs.
Furthermore, this creates the same housing bubble that was created in southern countries, especialy Spain. Here are some news signal an active inflating market:
Warum der deutsche Häusermarkt jetzt boomt
Makler sehen jetzt die richtige Zeit zum Kauf
What is happening, as I say, is that many banks in Germany and Austria are not funding commercial projects, but simply going into real estate. This produces a corrosive inflation: rising property prices hinders productive investment, as the growing costs of premises and the flow of money out of the industry makes it impossible to undertake a project, leading to an erosion of Germany's industrial economic edge. Do you really think that Merkel will let house prices to continue to rise by 10-15% annually? This is not sustainable and I expect the German government to take action in some way, most likely confronting ECB's president Draghi. On the other hand, housing prices in Austria are going crazy. An acquaintance reported a fifth-floor, 140 square meters penthouse selling for 1.2M €. This acquaintance, who has lived there for 25 years, has never seen anything like it: many food items have doubled in just one year, and certain not so basic, but necessary products have tripled in nine months. Inflation is also inflating commodity prices, it is not uncommon to find bread for 4 € in Billa or Merkur supermarkets, which would be unthinkable just a year ago. What this means is that money thought to reactivate Portugal or Spain is moving around and wreaking havoc in European creditor countries.
At this juncture, I believe that some action to move rates higher will be taken. They will, or maybe already have, abandoned Spain and Greece, Ireland and Italy, and the Euribor, the main housing rates index, will go to levels close to those of 2008 and 2009. This would be a death sentence for those countries industries.
We can therefore say that the era of low interest rates in Europe is over. For those having a mortgage, especially in the peripheral countries, brace yourselves.