Construction costs are currently skyrocketing

If all the parental homes of those who are currently building themselves or leaving the region to put down roots elsewhere come onto the market, the market (depending on the region) will noticeably shift. However, this will not happen overnight; the process will be gradual and will also stretch over several years until one can truly talk about a relaxation. Those who are looking for something for themselves and their family today do not need to worry much about such scenarios anymore; they will no longer benefit from them. Those likely to rub their hands will be everyone from around the year 2000/Generation Z.

And one must never forget one thing amidst all this: there is a lot of money in circulation out there.

And a lot of money has been thrown onto the market for years. Since Corona, a lot of debt money as well. How is an economy supposed to peacefully rid itself of an overwhelming debt burden if not through inflation? I think (layman’s terms) that we are only at the beginning of what we notice as a price increase. Since the calculation of inflation always also accounts for quality improvements (hedonic price adjustment), these figures remain lower than what a person actually feels. The quality of houses, for example, has significantly increased due to much improved energy efficiency. New builds have become much more expensive, but also higher quality – through the "hedonic price adjustment," the price increase is relativized. The fact that one can no longer practically buy a house of 1980s quality plays no role in this calculation. The same applies to electronics, automobiles...

And a lot of money has been thrown onto the market for years. Since Corona, also a lot of debt money. How is an economy supposed to peacefully rid itself of an overwhelming debt burden if not through inflation? I think (amateurishly) that we are only at the beginning, which we notice as a price increase. Since the calculation of inflation always also includes quality gains (hedonic price adjustment), these numbers remain lower than what one perceives personally. For example, the quality of houses has significantly increased due to much improved energy efficiency. New constructions have become much more expensive, but also higher quality – through the "hedonic price adjustment" the price increase is relativized. That you can no longer practically buy a house with the quality from the 80s plays no role in this calculation. The same applies to electronics, automobiles...

Yes and no. The currently built houses are almost impossible to repair due to the insulation materials used. And they do not age that well. Renovating an insulated facade is quite an effort due to the high disposal costs. A lot is built very cheaply with an expensive price tag.

The currently built houses are almost irreparable due to the insulation materials used. And they do not age that well. Renovating an insulated facade is quite an effort due to the high disposal costs.

This does not interest anyone calculating inflation; an increase in quality is accounted for according to the hedonic function. Deteriorations are not recorded, by the way (shorter lifespan or higher maintenance costs). Thinking one step further and considering that the inflation value determined by the Federal Statistical Office flows into the calculation of adjustments to social benefits, one can see what an enormously large lever this holds for financial policy. Calculation example with house prices: If it is assumed that a house of comparable size and equipment, which meets the legal minimum requirements, cost €150,000 ten years ago and costs €300,000 today, and at the same time the quality increase is valued at 100%, the construction costs calculated according to the hedonic formula remain at a constant level—despite significant actual price increases per year for achieving the respective valid minimum requirement.

well, but the same will happen in 10 years when evaluating the current new buildings. We are not at the end of a technological progress.

well, but the same thing will happen in 10 years when evaluating the current new buildings. We are not at the end of technological progress.

The problem is not technological progress, but the way it is factored into price indices. The calculation mechanism is particularly problematic for financially weak people in society and also affects the so-called "middle class." The determined inflation conceals a declining ability to participate in society as well as in individual markets, such as the real estate market. Put bluntly: construction costs are "skyrocketing" and the price index says "nope."