Construction costs are currently skyrocketing

I have my doubts whether this will subside so quickly. The wage-price spiral is just beginning and interest rates are still comparatively low. Accordingly, quite a few will still want to convert their available cash into real estate. Interest rates are one factor, but another is the expectation for the future. As long as enough buyers assume rising prices, they will continue to rise.

I am very curious about the wage spiral, especially with regard to the unions. Despite the high inflation in 2021, relatively little has happened and currently little is happening. Living costs are rising, wages remain almost the same, interest rates are increasing, and construction costs are rising.

Speculators can still afford this. There are enough who can pay the current construction costs in cash from their household accounts. For future homeowners who save this from their regular wages, however, it is becoming increasingly difficult. This makes a big difference in the homeownership sector. Simple calculation: 1% interest with 3% repayment on 500,000 euros = 20,000 euros per year. 3% interest with 3% repayment on 500,000 euros = 30,000 euros. This is already shaking the market. The material price surcharges in many offers are also completely exaggerated, as many companies are trying to make a killing while still complaining a lot.

I have my doubts whether this will subside so quickly. The wage-price spiral is just beginning and interest rates are still comparatively low. Accordingly, many will still want to convert their available cash into real estate. Interest rates are one factor, but another is the expectation for the future. As long as enough buyers expect rising prices, they will continue to rise.

At this point, I would also start to distinguish between new construction and existing buildings. With new construction, you have a modern house from the start with good insulation, heat pumps, and photovoltaics. In most older buildings, on the other hand, an expensive core renovation is necessary if you want to properly meet future regulations. Simply replacing the oil burner with gas is no longer enough. Those running their old buildings with an existing gas heating system will still face quite a bit due to the CO2 pricing.

Is it really like that with the gas heating? Asking for a friend... He wants to switch from oil to gas soon...

I am very curious about the wage spiral, especially regarding the unions. Despite the high inflation in 2021, relatively little happened and currently little is happening as well. Living costs are rising, wages remain almost the same, interest rates are rising, and construction costs are increasing.

I am very curious about that as well. However, the fact is that one cannot demand too much from companies given the current situation – some companies will struggle with energy prices, raw materials are expensive, and in the automotive industry, for example, chips and wiring harnesses are lacking. Short-time work, job cuts (we hope this won’t happen), and tariff increases do not really fit together – but the unions will certainly go into the negotiations again with completely exaggerated demands.

Politically, the gas heating system is dead. It was already planned to ban new gas heaters in existing buildings from 2025 (?), but given the current situation, I firmly believe this will happen earlier. In new construction, it is supposed to be phased out as early as 2023 ( ). And regardless of bans, the issue of gas prices is simply a problem. I consider it questionable whether we will ever return to single-digit gas prices; this will then lead to various measures intended to serve climate protection.

I am very curious about the wage spiral, especially regarding the unions. Despite the high inflation in 2021, not much happened, and currently, little is happening as well. Living costs are rising, wages remain almost the same, interest rates are rising, and construction costs are increasing.

The unions are currently struggling. But changes are being made elsewhere: €12 minimum wage, 5-6% pension increases. The latter in particular does not necessarily encourage restraint in wages. And such a wage-price spiral takes time to get going. In 2021, there was still the expectation that most of the inflation was indeed temporary. Now it looks far from that. At the end of ’22 and especially in ’23, we will certainly see different wage rounds than in ’21.

I am very curious about the wage spiral, especially concerning the unions. Despite the high inflation in 2021, not much happened and currently not much is happening either. Living costs are rising, wages remain almost the same,

Current agreement Postbank - 3.1% from 06/2022 and then another 2.1% from 02/2023. The sips from the bottle are actually becoming quite substantial...

the unions will certainly go into the negotiations again with completely exaggerated demands.

the announced pension increase of 5-6% is already an indication of a rising wage/price spiral