The German housing market has been remarkably strong in the last couple of decades, but it faces a serious price correction in the next couple of years, according to some analysts.
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Two German states hold elections on Sunday at the halfway mark of Chancellor Olaf Scholz’s unpopular national government, with polls showing the center-right opposition well ahead and Germany’s interior minister facing an uphill struggle in a bid to become governor of her home region.
About 9.4 million people are eligible to vote for the new state legislature in Bavaria and around 4.3 million in neighboring Hesse, a region that includes Germany’s financial capital, Frankfurt. Both states are led by the country’s main opposition Union bloc, made up of the Christian Democratic Union and the Bavaria-only Christian Social Union.
The outcome could increase tensions in Scholz’s three-party coalition, which has become notorious for infighting, and offer pointers to who might challenge Scholz in the 2025 national election.
Polls point to the CSU, which has led Bavaria since 1957, extending that run — albeit with lackluster support, by its historical standards, of less than 40%. In Hesse, they give the CDU a double-digit lead in a three-way contest for the governor’s office among the conservative party, Scholz’s center-left Social Democrats and the environmentalist Greens.
The far-right Alternative for Germany party, which has risen to second place in national polls behind the Union, won’t be a factor in determining the new governments of Bavaria or Hesse, as other parties refuse to work with it. But they will be watching whether it improves significantly on double-digit showings five years ago.
The three national governing parties — the Social Democrats, the Greens and the pro-business Free Democrats — won’t do well on Sunday because people “aren’t confident in their being able to solve the problems in the country,” prominent political scientist Karl-Rudolf Korte told the Welt am Sonntag newspaper.
“That has to do with the variety of crises, but also with the communication,” he said. “The situation would be different if the (coalition) partners would explain better what they are doing and why, if they would act more closely together.”
Voters have been turned off by repeated public squabbling, notably on a plan to replace fossil-fuel heating systems with greener alternatives. Polls suggest that the Free Democrats could struggle Sunday to win the 5% support needed to keep their place in the two state legislatures; previous election flops for the party have fueled tensions in the national government.
Scholz would have to find someone new to lead his government’s response on that issue if Interior Minister Nancy Faeser becomes governor of Hesse, but she doesn’t appear likely to end the CDU’s 24-year hold on the job. Green challenger Tarek Al-Wazir, currently the deputy governor to conservative incumbent Boris Rhein, also faces an uphill struggle.
In Bavaria, governor Markus Soeder is calling for voters to back “continuity and stability.”
He has bet on continuing his current coalition with the Free Voters, a conservative party that is strong locally but isn’t represented in the national parliament. Soeder decided last month to keep that party’s leader, Hubert Aiwanger, as his deputy governor despite a furor that started with allegations — denied by Aiwanger — that he was responsible for an antisemitic flyer when he was a high school student 35 years ago.
Soeder is widely considered a potential candidate to challenge Scholz in 2025, although he has denied such ambitions. A respectable result on Sunday would underscore his standing.