Construction costs are currently skyrocketing

2021-10-29 16:52:36

Much of first-semester economics. Demand (clearly also because of the extremely low interest rates) higher than supply (of craftsmen, materials, etc.). Supply of craftsmen = low because of too few newcomers. Supply of materials too low because of partial delivery delays (thousands of container ships are waiting), shutdowns during Corona. All effects combined act cumulatively extremely. I do not expect a recovery for years: Price increases will be higher for the average person wanting to build than the possible savings rate. Those who want to build (and can) should do it now. Waiting does not help. Except for even higher costs.

2021-10-29 17:08:51

The drift towards climate discussion here annoys me as well. As of today and now, the topic of climate protection has had pretty much no impact on cost development in relation to the past few years.

2021-10-29 17:13:05

...Demand (of course also because of the extremely low interest rates) is higher than supply (of craftsmen, materials, etc.). Supply of craftsmen = low, because too few young professionals. Supply of materials too low,... All effects combined act cumulatively and extremely. I do not expect a recovery for years: The price increases will be higher for the average person wanting to build than the possible savings rate. Anyone who wants to build (and can) should do it now. Waiting brings nothing. Except even higher costs.

In addition, building projects have become speculative objects. Since there are no interest earnings on accounts, many seek speculative profit in the real estate market. And they then have even more money which they "have to" invest again. According to a TV report, it was recently shown that about 40% of building plots are not intended to be used for construction at all, but only for speculation. Which of course strangles those who have real needs and truly want to build.

Nevertheless, this bubble cannot be inflated endlessly.

About 10 years ago it was similar in Spain. With the result that more and more was bought/built on credit, which at some point could no longer be sold. Leading to a chain reaction of bankruptcies, price drops, empty promises, "building mafia," etc.

Maybe max another 2 years?!

2021-10-29 17:15:30

In addition, construction projects have become speculative objects.

Even though I do not fully grasp the topic, the German real estate market seems to be a paradise for money laundering that is unmatched.

2021-10-29 18:04:27

In addition, construction projects have become speculative objects.
If there are no interest rates on the account, many seek speculative profits in the real estate market.
And afterwards they have even more money that they "have to" reinvest.
According to a TV report, it was recently shown that about 40% of building plots are not
intended to be used for building at all, but only for speculation. Which, of course, strangles
those who have genuine needs and really want to build.

Nevertheless, this bubble cannot be inflated endlessly either.

About 10 years ago it was similar in Spain. With the consequence that more and more buying/building on credit took place, which eventually could no longer be sold. With a chain reaction
of bankruptcies, price drops, phantom projects, "construction mafia" etc.

Maybe max 2 more years?!

Or 20...? Who knows, if it happens at all in Germany

2021-10-29 18:10:51

In addition, construction projects have become speculative objects.
If there are no interest rates on the account, many seek speculative profit in the real estate market.
And then they have even more money that they "have to" invest again.
According to a TV report, it was recently shown that about 40% of building plots are not intended to be used for building at all, but only for speculation. Which of course strangles those who have real needs and really want to build.

Nevertheless, this bubble cannot be inflated indefinitely either.

About 10 years ago, it was similar in Spain. With the result that more and more was bought/built on credit, which eventually could no longer be sold. With a chain reaction of bankruptcies, price drops, hot air, "construction mafia," etc.

Maybe a maximum of 2 more years?!

I think that depends very much on the interest rate development in the next few years. If interest rates continue to fall, or even become negative, then your plot/house is "infinitely" valuable because the loan pays itself off "by itself."

And then we are already back to the climate issue:
What is more important for politics (& ECB, which theoretically should be independent but is practically strongly influenced by politics): value stability and curbing inflation or cheap financing of climate protection measures.

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Construction costs are currently skyrocketing

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