Construction costs are currently skyrocketing

I here recall some threads from last year, in which some loudly claimed that interest rates will definitely not rise in the next years and therefore even advised people to choose a maximum of 10 years fixed interest period...

I remember some threads last year in which some loudly claimed that interest rates would definitely not rise in the coming years and even advised people to choose a maximum fixed interest period of 10 years...

Yes, I had thought of that too. I am happy about my 20-year fixed interest rate.

Soon hardly anyone anymore….. Prices will have to fall sooner or later. The broad masses can no longer afford a house now and those who have money don’t want a terraced house…

Which will probably bring the prices for building materials etc. back down to a reasonable level. Apart from that, my brother built in 2006 with a 4,x construction interest rate. That was possible too. Only the total costs (land + house) felt about half as high as today (for a comparable project).

But this will presumably bring the prices for building materials, etc. back into a reasonable range. Apart from that, my brother built in 2006 with an interest rate of 4.x%. That was doable too. But the total costs (land + house) felt about half as high as today (for a comparable project).

And that's what makes the difference.
From 2015 to 2020, prices did increase sharply, but interest rates went down moderately, which at least balanced things out somewhat.
For about 3 months now, costs have exploded along with interest rates, which is a very unfavorable combination.

I remember some threads last year where some loudly claimed that interest rates definitely would not rise in the next few years and therefore even advised people to choose a maximum fixed interest period of 10 years...

Well, then maybe your crystal ball was better calibrated. If anything happens in the next 9 years and interest rates fall to 0.01%, it was the right decision.

Such "black swan" events like the Ukraine situation or Covid are exactly the uncertainties that cannot be priced in.

Basically, it's like playing the lottery: you buy a cheap standard ticket (10 years); or you play a system game (20 years) - which then just costs more (interest premium).

Financing requirement over 20 years for €500,000 (interest 2.7% + repayment 2.5%) = €2166!!!! This is nicely calculated without a new kitchen + possible small renovations... and still a considerable remaining debt after 20 years.
Who can still afford that?

So we currently have a net income of €5200, of which €1800 is going into the installment, €1000 into special repayments/savings, and probably another €500 into ongoing projects, such as garden, paths, finishing the interior...
So in total, we currently spend about €3300 per month on the house and actually continue living quite normally and well with the remaining €1900.
I think many can still manage a €2200 installment. But maybe I’m mistaken.
Or the harsh awakening will come once children arrive.