Construction costs are currently skyrocketing

It's not the interest rates and not the construction costs, it's the minds of the people.

Survivorship bias also plays a role here. We only see the ownership from the 80s/90s that exists – sounds simple, but even back then there were people who couldn’t afford it. Or could only afford a very stripped-down version. My parents moved into a house that was basically still a shell and gradually built it out little by little, and only six years after the birth of their first child did they have central heating. Looking back on it? "That’s just how it was!" Today, apparently, there is some obligation somewhere that EVERYONE builds a single-family house. With a steam cooker. And an extractor hood. Smart, of course. Preferably bling-bling. Infrastructure? Doesn’t matter, just the cheapest, please. Sorry, but with some house discussions I think: My grandparents, despite all hardship, somehow thought things through further.

No, there is neither a right to a single-family house nor a fundamental right to the cheapest possible heating, no matter how polluting it may be.

If I was able to get a house for DM 200,000 in 1986 with a net household income of DM 2,000, but today I can't manage a house for €500,000 with €7,000, it's not because of the "expensive" prices, but because you spend more money today (also relatively, not just absolutely) on frivolous consumption than back then. Houses today are cheaper in relation to income and the general price structure than they were back then.

I liked the heating engineer who put the whole heating debate into perspective. His experiences align with mine: There is an SUV in front of the door that often has €20k worth of extras alone, but if the heating is €5-10k more expensive, people make a face like they are having a root canal without anesthesia. The SUV will be gotten rid of in 1-2 years, the house you have for decades. Setting priorities? Yes, exactly.

The biggest difference I actually see is in the sincerity regarding one's own prioritization: My grandparents and parents simply say: "Yeah, that's just how it was back then." Today it's: "I HAVE A RIGHT TO AN SUV AND A SINGLE-FAMILY HOUSE AND THEY WANT TO TAKE THAT AWAY FROM ME!!!ELEVEN"

Of course, construction methods were different back then. But that’s not the point. The single-family house standard in 2023 is (financially) easier to achieve today on 27.06.2023 than the standard in 1986 on 27.06.1986. Back then, you had to sacrifice more of your income – relatively speaking – than today. That’s the only point I’m making.

No, you’re thinking too narrowly. If I managed to afford a house for DM 200,000 in 1986 with a net household income of DM 2,000, but today cannot get a house for €500,000 with €7,000 income, that is not due to the "expensive" prices, but the fact that today you spend more money (also relatively, not just absolutely) on unnecessary consumer goods than back then. Houses today are cheaper in relation to income and the general price level than they were back then.

Yes, that is also part of the issue. If you had to build like that back then, costs would have been significantly higher and many could no longer afford it. Back then, construction was simple because it was possible and at least affordable. That option no longer exists today. You have to keep that in mind.

Yes, that is also part of it (partially). If back then you had to build like that, the costs would have been significantly higher and many would not have been able to afford it anymore. Back then it was simply built because it was possible and because at least you could afford it that way. That option no longer exists today. You have to keep that in mind.

Today, unlike in the past, there is the possibility to find a rental apartment in an appropriate price range. That was much less the case back then. People didn’t just build because they could, but also because they had to. Our settlement was built starting in 1960, my in-laws’ row house settlement in 1980/1990. Before that, there were fields.

There are still apartments today of the former "standard," meaning one oil stove per floor, small windows, etc. Why does nobody move in and maybe renovate? Right, because nobody feels like it.

No, you are thinking too short-term. If I managed to get a house for DM 200,000 in 1986 with a net household income of DM 2,000, but today cannot get the house for €500,000 with €7,000, it is not due to the "expensive" prices, but because today you spend more money (also relatively, not just absolutely) on fancy consumption than back then. Houses today are cheaper in relation to income and the general price structure than they were back then.

Unfortunately, I can’t quickly find figures for net household income in the 80s, only an average gross income for full-time employees of around 3000 DM. Net per household would probably be about 2000 DM or just above. Today it’s easier, the average net household income is 3600€. Your €7,000 is therefore far above average and with that you can of course finance a €500k house. But that is completely irrelevant for the majority of the population, because they only have about half that. Let’s assume a €200k house with a 2k income, that is one hundred times the net income. But a €500k house with 3.6k is 138 times the net income. Honestly, one must also calculate interest; here I assume 20% equity and a 25-year term for both. The financing in the 80s with 8% interest comes to a DM 1200 installment, and the financing today with 4% interest to €2100. Both times that is close to 60%.

Net household income of 1987 as 2000 DM is really understated. I already had that in '90 right after my apprenticeship at 19 years old. But apart from that, the purchasing power with 2000 DM was completely different than today. I built for the first time in 1999 with a net household income of just over 4000 DM. Interest rate back then was 6 percent. House construction costs about 250,000 DM. I had to finance 150,000 DM of that. It worked, but also with a lot of own work. Today: Net household income: just under 5000 euros. House construction costs: roughly 500,000 euros. Of that, 300,000 euros financed at 0.9%. It works as well, this time with less own work. But with significantly higher incidental costs (proportionally seen) compared to 1990. With now 4% interest rates it would be impossible for me to build.