Construction costs are currently skyrocketing

That's exactly how it looks.

... so, 8 years ago you could still easily buy a plot here for 250 euros / sqm. 700sqm * 250 euros/sqm = 175,000 euros. A house was indeed feasible for 300k euros. Altogether, building a house here for 475k euros plus incidental construction costs was doable. The interest rates at that time were a very low 2.x%.

... as of today, you pay about 880 euros / sqm. 616k euros for 700sqm. A house for under 500k euros in this region is hardly feasible. Altogether you are currently looking at nearly 1.2 million plus incidental construction and purchase costs. Added to this are now increased interest rates of 2 to 3%.

Hardly any salary increase will be enough for that.



I am quite sure that this will happen.

Mmhh... yes and no. I also find these past comparisons extremely difficult. One should not forget that interest rates have steadily fallen overall in recent decades (short exceptions aside). That is what enabled many to build houses in the first place. Because falling interest rates lowered the installments. On the other hand, construction costs did not explode that quickly.
Now it is exactly the opposite. Interest rates are rising again, but construction costs will not instantly correlate and fall 1:1 as a result.

Let's take your example and add mine.
I renovated a condominium in 2010/11. I needed a loan for that. I would have to look up exactly what the interest rate and closing date were. But it was 4% interest. Naturally, construction costs were lower back then. 250 EUR/sqm was already paid for building plots here at that time, too. And 300k for a house was also gone immediately. With my salary back then, I would not have been able to build with that amount of equity. The condo before renovation was paid off but maybe worth 130k. I would have easily needed another 400k.
Even if I only needed 300k... back then a rate with 2% amortization would have been 1,500 monthly.
But that was 10 years ago. Back then I also had a lower salary.

So yes, in my opinion, in the next few years some people will no longer be able to build a house who would have managed it under similar circumstances in recent years... the question is just from which perspective you look at it. The next few years might see some deviations (that’s why there will still be enough who can afford it), but maybe the last few years were also a deviation, just in the other direction...

The question is whether that will then be enough. Renovating millions of houses to heat pumps in a short time is nothing other than a demand shock. On top of that, the goal of building 400,000 apartments per year in the future, which also represents a very significant increase compared to the status quo. The supply of craftsmen will not be able to keep up with that. And if demand rises faster than supply, prices will rise. A subsidy program will then only cause prices to explode even faster. Another problem – which in my opinion is much too little considered – is that renovations can hardly be carried out while living in the house. Underfloor heating and new screed make the house uninhabitable for at least 2 months, there is nothing to discuss about that.

Basically, I totally agree with you. I myself have already written that I consider a renovation offensive combined with a housing construction offensive unrealistic. Renovating while living in the house, I will report :) Upstairs, except for the bathroom, the screed is out. But dry screed is supposed to be installed. Let’s see if we can stay completely inside :cool:

And when I look at the USA like this, I predict that no average earner will benefit from a burst bubble. Then what has been happening in the USA since 2009 will also happen here: real estate companies buy single-family houses to rent them out.

Yes, but when I look at older houses... there are often relatively small radiators placed under the windows (compared to the room size). Often also behind some corner benches. You can't get those down to 40 degrees flow temperature, but with higher temperatures you only get a COP of 2-2.5, even if there are still positive temperatures outside. I’m not even talking about a real winter yet. You simply can't trick physics. And that is a financial problem with the high energy demand of old buildings, 10,000 kWh of heat electricity is just too expensive (assumption of the calculation: COP=2.25, 150 sqm at 150 kWh/sqm, so still a relatively reasonable old building). Because electricity prices won’t go down to 30 cents anymore.

From the calculations definitely correct.
But if I have the choice during renovation whether to make the heating suitable for heat pumps (and I have the space for that, for example in my 200 sqm old building on the walls) or to tear up all the floors, redo them, etc., then I consider which alternative is better. And large radiators + living inside during the renovation doesn’t sound bad at first.

As I have already written elsewhere: From my perspective, renovation is currently not financially worthwhile. I hope that an incentive program will be introduced...

Such an incentive then again lines the pockets of the construction industry, which opens the umbrella...

Let's take your example and add mine. In 2010/11, I completely renovated a condominium. I needed a loan for that. I would have to check exactly what the interest rate was and when the completion date was. But it was 4% interest. Of course, construction costs were lower back then. Even then, 250 EUR/sqm was already paid for building plots in our area. And 300k for a house was gone just like that. With my salary at the time, I couldn't have built with the equity I had. The condominium was paid off before renovation but worth maybe 130k. I would easily have needed another 400k. Even if I had only needed 300k... back then, with 2% amortization, the monthly payment would have already been 1500. But that was 10 years ago. At that time, I also had a lower salary.

Since I got the benefit of a condominium in early 2012. The interest rate was already at 2.68%! Only the difference was that I could negotiate with the seller back then. In the same area, I could have even afforded a used single-family house on my own. New construction projects by neighbors and friends worked exactly with the conditions I described. But back to my condominium. At that time, you could easily buy in large cities for 20 years’ net cold rents or less. The monthly bank installment with decent amortization was just as high as the cold rent at that time. That shows how far we are today from the conditions back then. Here in the big city, we have a factor of 35-45 years’ net cold rents. That is madness. Even four years ago, you could still find properties with factors of 20-25; newly rented ones are now more like 15-20.

The comparisons do not lag at all. What is not acceptable is to say "I was just a student back then or earned very little." Then you can talk yourself into anything. My comparison shows that with a decent income 10 years ago, despite 2-3% interest rates, one could comfortably afford to buy a condominium or single-family house. Maybe one was not ready back then because of no equity, still a student, or ... but purely in terms of possibilities, those were different times.