Construction costs are currently skyrocketing

Hi,
I have been following this topic for a while, as we are also considering or intending to build new. In a homebuilder's book, I read something about the [IVD Erschwinglichkeitsindex]. As the name suggests, the index is supposed to represent how "affordable" buying a house or building new is in different regions of Germany. It distinguishes between the top regions of Germany (Hamburg, Munich, Stuttgart, etc...) and depending on the size of cities.
Values over 100 stand for "affordable" and values under 100 stand for "not affordable." I was surprised that despite everything, new buildings or property purchases in small towns (5,000 to 10,000 inhabitants) are given a value of roughly 135. Of course, the values for new building projects in the top cities are not surprising...
I don't know if I am allowed to share the link, but just type [IVD Erschwinglichkeitsindex] into the search engine. The current figures represent Q4 2021.
I am already looking forward to the result for Q1 2022...

PS: You can also nicely see there how the net household burden changes.

So we currently have 5200€ net income, of which 1800€ is going into the installment, 1000€ into special repayments/savings, and probably another 500€ into current projects, for example garden, paths, interior finishing completed...
So in total, we are currently spending about 3300€ per month on the house and actually continue to live quite normally and well with the remaining 1900€.
I think many can still afford a 2200€ installment. But maybe I’m wrong.
Or the harsh awakening will come once children are here.

Not everyone has 5.2K net! And if you have children, it’s no longer 5.2K net...

Thank you for your assessment.
Can you give an approximate figure for "little equity"? So what would be "more than little"?

I think that also depends on the region. But as a minimum equity, I would set the incidental purchase costs plus 10-20% of the planned construction costs and keep this reserve/equity back and currently, as I said, prefer to finance 100%.
By the way, this is how I myself already financed in 2019. Financed 100% of the initially planned construction costs with a 30-year fixed interest rate and initially kept the available equity back and then partially financed slight cost increases and "upgrades" with it, in combination with additional savings from ongoing income. Only in 2019 the prices were fixed.

what would be the alternative, I had the rent calculated for our 3-year-old house through a rental portal, 3200-3700 € per month :oops:, we cannot afford that

But maybe I'm mistaken.
Or the harsh awakening comes as soon as the children are there.

If you’re not lucky enough to snag used children’s items completely, you can lose a lot of money. We had several children in the family, but the only other summer babies were girls, so the boys’ clothes from the family didn’t fit. That was still avoidable in the first few months, but from about a year on, it wasn’t so easy to get used unisex clothing. Shoes are very expensive and you need quite a few. So we spend around 300 euros on average per month for our two boys. This also includes sportswear. It all adds up.

So right now we have €5200 net and currently €1800 of that goes into the rate, €1000 into special repayments/savings, and probably another €500 into current projects, like garden, paths, interior finishing complete...
So overall we are currently spending about €3300 a month on the house and actually continue to live quite normally and well with the remaining €1900.
I think many people can still manage a €2200 rate. But maybe I'm wrong.
Or the harsh awakening only comes once there are children.

But very few have a net income of €5,200. Especially not young people or families with kids.
And with the remaining €1,900, traveling or elaborate hobbies become tight. If you want to give those up for life, it's certainly possible. But you must never forget that it’s not just a few years.