Despite substantial increases in German residential property prices, price-to-income and price-to-rent ratios are close to their long-term averages. Yet historically low rates of interest mean that both should be close to historic highs, which suggests that house prices are likely to rise faster than rents. Moreover, near-term demographics combined with a cyclical upturn will ensure that demand for housing remains strong. We expect rents, especially those in Germany’s largest cities, to rise further…