Construction costs are currently skyrocketing

How is life in the new house?

Well, that was the case in 1920. In 1983 too. And besides 2019, it still applies today. But after 10 years of only falling interest rates (I even completed mortgage loans with negative interest rates - as a banker, not as a customer) no one is used to money having a price and having to sacrifice something in order to afford something. Hard work, sacrifice, etc. - simply wasn't necessary in the last 10 years.

Of course, falling interest rates have enabled many people to get into homeownership, but this is very important: Even though construction prices were still somewhat normal in 2019, land prices had long since been beyond reason. For the older generation, prices increased from €30 per sqm in 1980 to €240 per sqm in 2020 at the same location, an eightfold increase. Just imagine that. Within 40 years you go from having to spend €21,000 to €168,000 for a 700 sqm plot. Then low interest rates don’t help much anymore. But yes, more people could still build today through their own labor. But nobody wants that anymore.

In our area, land prices have more than doubled within 7 years. We paid 110€/sqm back then, currently the price is 240€/sqm. We were damn lucky to have built in 2016 at exactly the right time. The land was cheap, construction prices much lower, and interest rates at rock bottom. We had construction costs of 1,750€/sqm including all incidental building costs excluding land. Currently unthinkable :(

For the older generation, prices increased eightfold at the same location, from 30€ per sqm in 1980 to 240€ per sqm in 2020. Just imagine that. Having to spend 168,000€ instead of 21,000€ for a 700sqm plot within 40 years. Low interest rates don’t help that much anymore.

Well.
In 1980, the mortgage interest rate was around 10%. So, with full financing, 2,100€ had to be paid annually in interest at first.
In 2020, the mortgage interest rate was around 1%. So, with full financing, 1,680€ had to be paid annually in interest at first.

Just imagine that. In 2020, one could buy + finance more cheaply than in 1980. And that with an average income that was two to three times higher.

So much for your statement.

Well. In 1980, the construction financing interest rate was around 10%. So with full financing, 2,100€ had to be paid annually in interest at first. In 2020, the construction financing interest rate was around 1%. So with full financing, 1,680€ had to be paid annually in interest at first. Just imagine that. In 2020, you could buy + finance more cheaply than in 1980. And that with double to triple the average salary. So much for your statement.

Nonsense. If the land was equity and the house was self-built over several years back then, it was of course cheaper than today. But today, turnkey (preferably even with flooring/painting) is more expensive for most people because they no longer want to get their hands dirty themselves.

You have to imagine that. Within 40 years, instead of having to pay 21,000€ you now have to pay 168,000€ for a 700sqm plot of land. Then low interest rates don’t help that much anymore.

Yep, my parents-in-law financed at 8%, but looking at the purchase price, it was still a good deal.

Well, here the price per square meter is consistently above 2k/m² and the terraced houses, like the ones they have (1980/90, district heating), are sold for 1.1-1.2M.

But yes, through own labor even more people could build today. But nobody wants that anymore.

The last time I suggested “own labor” here, I was told to build a “mud hut” and other things. Well, those who don’t want to, already have it.