June 19 - Germany's Finance Minister has issued a stark warning about dangerous price developments in Germany's real estate market. As Sonia Legg reports, he also says interest rates are too low.
They say location, location, location is the only thing that matters when it comes to buying a house. Well, the U.S. Treasury Secretary says building, building, building them is the key when it comes to healthy economies. (SOUNDBITE) (English) US TREASURY SECRETARY JACK LEW, SAYING: "When we look at the US economic recovery almost every other part of the recovery is on track with past experience. We've seen short term unemployment rates came back, we've seen manufacturing grow strongly. Where we have seen some slowness in the recovery is in housing and construction." He's in Berlin meeting his German counterpart, who like many in Europe is worrying about rising house prices. (SOUNDBITE) (German) GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE, SAYING: "We in Germany have signs - as a consequence of the low level of interest rates and the very low inflation rate - of price developments that are dangerous and that we must take very seriously." Last year, German home permits hit their highest level for nine years. And in February the Bundesbank said residential property prices in big German cities were probably over-valued by an average of 25 percent. (SOUNDBITE) (German) GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE, SAYING: "We have to make the changes that are necessary in order to use the leeway the monetary policy of the ECB has given us. In the long run, the amount of liquidity is too great and the level of interest rates too low." That's all very well for him to say - but others in Europe are relying on low rates. And Dominic Johnson from Somerset Capital Management says Germany's prospects too aren't as strong as they were either. (SOUNDBITE) (English) DOMINIC JOHNSON, CHIEF EXECUTIVE, SOMERSET CAPITAL MANAGEMENT, SAYING: "I think we need to be very careful about assuming that Germany is going to continue it's growth trend path into the near future because actually I see the German economy stodging out rather than slimming down." Germany remains the power house of the euro zone of course. But the housing debate shows, when it comes to interest rates, one size doesn't always fit all.