Construction costs are currently skyrocketing

Basically a very simple calculation: Around the corner from me (Cologne on the right bank) there is a house from the 1920s for sale with approximately 350 sqm of land. The simplest amenities but a nice plot. Listed price: €429K (!). The average price per sqm in the area is about €900. The only option I can think of is demolition and rebuilding. 429 + additional costs = 480 + demolition 35 = 515 K€ just for the land. A single-family house with 130 sqm x €3,500/sqm would bring me to almost €1 million in total. Who should/wants to pay that? I would estimate a core renovation at €125K-€150K, depending on the building condition. That’s still around €650K. Assuming an equity capital of €150K and 2% repayment, I end up with a monthly burden between €2,600 and €3,000. Ergo: The house is definitely overpriced and does not appeal to a buyer group that might be interested in such a house. And who can afford to tinker on the house forever without being able to live in it?

I see that completely differently. So the land alone has a value of at least €315,000. They want €429K, so that leaves €114,000 for the house. That’s completely okay for a house that still needs renovation. And it stands in a matured location. It would be different if the average price per sqm was €40 – then the offer would be poor. According to your calculation, you could make a freshly renovated single-family house here for €650,000, which stands on a plot for €315,000. Where is the bad offer?

Actually a very simple calculation: Around the corner from me (Cologne on the right bank of the Rhine) there is a house from the 20s for sale with about 350 sqm of land. The simplest equipment but a nice plot. The asking price: €429K (!). The rough price per sqm here is about €900.

And that’s supposed to be expensive? My neighboring plot including house was sold, and I showed interest. Plot 800 sqm, little house from 1960 with massive renovation backlog, and that even before the energy crisis. Better would have been demolition and new build. It was briefly asked around among friends and someone immediately put €1.7 million on the table. I was like: WTF??? Result: He bought the house and had to renovate for months to make it livable. Here, the price per square meter in all northern districts is over €2,000, and according to the development plan you can only build from 600 sqm upwards and at most a two-family house. Result: A new semi-detached house not under 1.5 million, single-family house not under 2.0 million. A terraced house with a small garden was only just sold for 1.2 million.

I lived in Ehrenfeld for a long time and witnessed the price increases there. We also considered going to the right bank because there was more available. So be glad there are still building plots at this price, here a buildable plot in B - C location starts at 1.5/1.2 million. That is absolutely prohibitive.

And who buys something like that? The childless hipster couple? We bought last year and just barely got fairly low interest rates. Without the corresponding equity behind me, I still wouldn’t have done it! In my opinion, single-family houses and also condominiums are completely overpriced. 60 sqm in Cologne Neubrück (not exactly the best residential location), built in 1968, but with district heating!, requiring renovation for 230,000 euros plus additional costs with a rent of 550 euros per month. And? Does something like that pay off? Not for me…

And who buys something like that? The childless hipster couple? We bought last year and just barely got comparatively low interest rates. Without corresponding equity behind it, I still wouldn't have done it! In my opinion, single-family houses and also condominiums are completely overpriced. 60 sqm in Köln Neubrück (not exactly the best residential area), built in 1968, but district heating!, with renovation needs for €230K plus additional costs with a rent of €550 per month. So? Does something like that add up? For me, no…

That the prices are crazy is clear. And that for at least 10 years. And it gets worse instead of better. The old building from the 1920s can't help that either^^. Compared to your prices, the offer is fair. Here the house wouldn't cost less either.

And who buys something like that? The childless hipster couple?

By no means - it was bought by a family with two children

By no means - it was bought by a family with two children

Where exactly is "here", if I may ask?