Financialization of the German housing market

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While many housing markets across the European Union have seen large housing price fluctuations since the 1980s, Germany has until recently remained a beacon of housing market stability. Since 2010, Germany however suddenly witnessed substantial housing price and rent increases. This thesis seeks to understand this price increase in light of a combination of short and long-term economic and institutional developments within Germany. Starting at the end of the Second World War, this thesis illustrates the rise of financialization in Germany as an effect of the breakdown of the Fordist accumulation regime. This breakdown of the Fordist regime also manifests itself in the policy regarding the housing and credit sector, which has increasingly become in favour of marketization, privatization and liberalization. It is this liberalization of housing in combination with the inflow of capital that is switched into housing that have led to the rise of property prices and rents in Germany. To confirm this, quantitative measurements of financialization, overaccumulation and capital switching are presented. Whereas most existing studies on financialization do not address the relation between agency and structures, this thesis illustrates that agency is crucial for understanding structural developments. Based on this analysis it is concluded that the developments of financialization and the liberalization of the housing and financial markets are the result of government regulation that seeks to reconcile and mediate the conflict of interests between different societal groups and fractions of capital.
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