Construction costs are currently skyrocketing

Just read in the major Frankfurt daily newspaper: Construction costs in November increased by 14.6% compared to the previous year. Adjusted for the VAT effect, still a solid 11.6%.

Of course, we know that no one knows what it will look like in 24 months, but wood and steel are currently being repeatedly cited as massively overpriced reasons. That has to come to an end at some point, and then prices should! (subjunctive, that's the thought) become somewhat more normal again. I partly assume that the Corona demand surplus has now been worked off for wood and steel.

In the current situation, there is a lot of imagination, disruption, and spillover effects involved. Which direction will it go? A turnaround in interest rates is already emerging this year. Otherwise, construction and the real estate market have been driven in recent years by inflation fears and private "desire to have."

Prices (construction & purchase) have probably reached their maximum—at least broadly speaking. If not, the volume will continue to shrink because no one can afford to build anymore, and at current prices, investing in rental housing is unprofitable. An inherited property only helps if you can still sell it. With renovation obligations, it’s all not that simple.

The public sector is already entering a savings mode—all the payments from the Corona cornucopia and the associated bazooka still have to be paid.

Construction will become much more expensive mainly due to the skilled labor shortage, not only because the remaining workers can demand higher wages, but also because construction in general will take much longer. Nowadays, one already waits forever for offers, if any come at all, and the coordination of trades is becoming increasingly difficult. Just in Time does not work there. In the future, those who can do some things themselves will save a lot of money. Even more than now. However, this also means that buildings from around now will have to be examined very closely, as improper solutions are likely to become even more common. So anyone who buys a house from this construction year in 20 years will really need good experts who can look beyond the first layer.

what signs do you see that interest rates will rise again?

what signs do you see that interest rates will rise again?

I am not a financial expert, but it is expected that the key interest rate will be raised due to inflation. Interest rates for construction financing have already increased somewhat.

what signs do you see that interest rates will rise again?

Yields on bonds are already rising and mortgage rates are following suit. We don't even have to wait for the ECB to raise the key interest rate; it is enough if they scale back their bond purchase program.