Construction costs are currently skyrocketing

I looked yesterday evening. In 2017, I wanted to buy a new ground floor apartment, close to the city center + top highway connection. 137m2 for 325k. incl. private garden use, maybe 100m2 + 25m2 terrace. It was the last available. I think since then the standard land value there has doubled and nothing goes for under 4k/m2 anymore.

I believe that many people do not actually calculate this investment as such but rather the question is: can I afford it (possibly with compromises) or not. And if yes, then just go through with it.

Yes, definitely. No one who critically calculates this could take these houses. Nevertheless, they were gone after a few days. There are plenty of people who could still afford it, but being unreasonable is easier with low interest rates. 1.5 years ago, a house like this with a 1200€ installment was still feasible. Now it rather needs about 2000€, and whoever can afford that money might want something else. Although money does not necessarily mean a newer property. leschaf is an example where the property will hardly pay off and yet an incredible amount of money is spent. But he can also afford to be unreasonable ;)

Currently for sale in our community: "Exclusive" new-build condominiums. Location: In the middle of nowhere. Highway 25 minutes away, many small villages, 1 hour driving to the next real big city. Six parties in a (admittedly really exclusive and nicely designed) multi-family house. Air-water heat pump, KfW55 standard, tiles and vinyl floors, elevator, balcony/terrace, barrier-free - garage or parking space is added additionally to the purchase price. Price for 93 sqm: 325k € - approx. 3,500 €/sqm. Price for 104 sqm: 395k € - approx. 3,800 €/sqm. Wow ... I am really curious if they will sell at that price.

I just looked in my hometown. Small town in the Upper Swabian province, 8,000 inhabitants including all districts, otherwise fits quite well your description. New build apartments are listed there at 4000€/sqm. But there are not many left.

But these are real costs. An example I already gave here: social housing (1400 m2 living space) by a church foundation, completed from 2019 to 2020 in our community in northern Bavaria (40 minutes from Nuremberg or Würzburg), land from the municipality: gifted.

Pure construction costs: 3500 /m2. No developer profit.
Again: social housing, land gifted. 2019. 3500 per m2...

I think I even read that post - back then I already found it extreme. That may be real and is not meant as a criticism of the developer here, but the prices are simply crazy. As I said, we live here in the Eifel, not in the commuter belt of a big city.

These are already real costs. An example I gave here before: social housing construction (1400 m2 living space) by a church foundation, completed from 2019 to 2020 in our community in northern Bavaria (40 minutes from Nuremberg or Würzburg), land from the municipality: gifted.

Pure construction costs: 3500 /m2. No developer profit.
Again: social housing construction, land gifted. 2019. 3500 per m2...

I do not question at all that these are real costs and also no great profit for the developer. The question is: Are we not slowly reaching the point where developers say: "No, it’s no longer worth it, I’ll put it on hold for now?" This is slowly making no sense at all anymore. On top of that, there are incalculable cost increases and delays with materials.

As mentioned, my acquaintance who closes construction financing deals daily reported: Around half of his clients, whether developers or private individuals, are currently backing out.

The question is: Aren't we slowly reaching the point where the developers say: "Nope, it's no longer worth it, I'll put it on ice for now?"

We have already passed that point. The first developers have put projects on ice or are reversing pre-sales against payment of a premium (before construction starts).

The point has already been passed. The first developers have put projects on hold or are reversing pre-sales against payment of a premium (before construction begins).

What do you see as the decisive factor here? The development of construction prices and interest rates up to today, material defects (and thus delays), or the unpredictability of construction costs, especially for materials, over the next 12 - 18 months? By unpredictability, I mean that the developer says, "Well, based on the current situation, I would carry it out like this, that would still be profitable, but I don’t know how material prices will look in 6 months"?