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With the German economy booming and interest rates at record lows, the central bank has long warned that property bubbles may be developing, a potential risk for financial stability.
The European Central Bank has also acknowledged the issue but noted that property bubbles were not a general phenomenon in the 19-member euro zone and were limited to a few key cities and to prime commercial real estate, requiring local prudential measures, not a change in monetary policy.
Rent costs for new leases increased by 7.25 percent in Germany last year while in the seven biggest cities, the increase was 9.25 percent, the Bundesbank said in a monthly report.