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The German market is not facing a housing bubble despite rising prices, accordning to an expert in the residential sector.

Speaking at the PropertyEU German Investment Briefing in London recently, Corestate Capital Advisors managing director Sascha Wilhelm said that recent rises in house prices were part of a phase of ‘adjustment’ in the markets, rather than an overheating as some have feared.

He said: ‘Demand for core is extremely high. It exceeds supply. That’s why we are seeing more and more international investors coming into Germany, driven by the fact that there is missing supply and prices are rising.

‘Between 1995 and 2008 property prices were falling in Germany, and they are now just coming back from 2008 levels. This is not a bubble it’s an adjustment to a normal pricing level. The prices are rising by two to three percent; this is still really stable compared to bubbles in Ireland and Spain’.

The audience were told that despite potential changes to rental regulations, the German residential market remains stable as an investment opportunity, particularly in the capital Berlin.

AEW Europe chief investment officer Rob Wilkinson said: ‘We’ve been investing in this kind of strategy for over seven years now and have a very focussed strategy on the Berlin market alone. It has been very successful for us. We’re buying older stock that has been undermanaged.

‘There are potential implications with rental caps that may come in as a result of the elections, but we don’t expect those changes to have a major impact on our strategy’.

Wilhelm added that investment transactions, which were recorded at €6bn in the first half of 2013 alone, the second best period for the last six year, show that confidence in German residential property is still high