Construction costs are currently skyrocketing

In 2023, nothing will be built anymore. There is no more material available.

The interest rate is marginal after all. In an inflationary environment, construction prices will of course continue to rise. Just like interest rates. When I warned last year of exactly today’s scenario with sharply rising interest rates, I was laughed at right here. Even the building savings contract I suggested was torn down.

Well, I don’t need financing, so I don’t care at all. For me as a saver, much better times are obviously coming.

An interest rate of 3.5 percent is still super cheap. The fact that prices have risen so much is of course a problem because the sums to be financed and thus the monthly payments become significantly higher. The problem is the too low incomes. The ECB simply cannot print trillions of euros and organize endless rescue packages without it affecting prices. Zero and negative interest rates are economically complete nonsense. Fifteen years ago, any economist who had thought such a thing possible would have been put in a mental institution.

And as I said, both the ECB and the FED inevitably face the question of whether to save the currency or endlessly inflate everything.

The time will come when a decision has to be made. Do we save the currency and let the economy crash or vice versa.
In my opinion, they will stabilize the currencies. And I see interest rates easily at 10 percent + X.

However, those who expect rising incomes should finance. Then the debts will relatively soon inflate away.
I still expect a very sharp liquidity crisis with massively falling prices. Possibly only a very short phase that should then be taken advantage of. Because afterwards, a sharp inflationary phase will follow.

But these are all just speculations.

The ECB simply cannot print trillions of euros and create endless rescue packages without it affecting prices.

In science (and no, I’m not an economist) we have the term “right results for the wrong reasons.” Ask an economist whether the supply shocks from Corona (closed ports in China) and the Ukraine war (energy prices) would have happened if the ECB hadn’t created so many reserves beforehand (by the way, it never created means of payment for citizens). Answer: Of course not. Still, the interest rate hike is supposed to achieve something on the inflation front. Say THESE SAME economists. One wonders who actually should be in the asylum… For imported inflation via ports being closed in China and energy becoming expensive because of war, the ECB is simply not responsible and has no means to do anything against it. But everyone hyperventilates the myth that the ECB now, through monetary policy… well, what actually? Gets gas cheaper? Innovates power plants? “Somehow” fights inflation! And this myth only makes sense if you believe they also printed it into existence before. That borders on idiocy, but it haunts the media as if we had no other problems.

In 2023, no more masonry will be done. There is no more material.

The interest rate is marginal. In an inflationary environment, construction prices will of course continue to rise. Just like the interest rates. When I warned last year about exactly today's scenario, with sharply rising interest rates, I was laughed at right here. Even the building savings plan I proposed was torn down.

Well, I don't need financing, so I don't care at all. For me as a saver, clearly better times are coming.

An interest rate of 3.5 percent is still super cheap. That prices have risen so much is of course a problem because the sums to be financed and therefore the installments become significantly higher. The problem is the too low incomes. The ECB obviously cannot print trillions of euros and hold endless rescue packages without it affecting prices. Zero and negative interest rates are economically complete nonsense. Fifteen years ago, any economist who thought something like this possible would have been put in a madhouse.

And as I said, the ECB as well as the FED inevitably face the question whether they save the currency or inflate everything endlessly.

There will come a time when a decision must be made. Do we save the currency and let the economy crash or vice versa.
In my opinion, they will stabilize the currencies. And I see interest rates of easily 10 percent + X.

But whoever expects rising incomes should finance. Then debts will relatively soon inflate away.
Nevertheless, I still expect a very sharp liquidity crisis with massively falling prices. Possibly only a very short phase which should then be exploited. Because afterwards a sharp inflationary phase will follow.

But these are all just speculations.

Sorry but this is absolute nonsense. Why demographic change reduces interest rates I had already written in a previous post. Also, the growth phase and globalization will soon come to an end (because of demographic change). Eternal economic growth is not possible and in this scenario, there are no significant interest rates. Where should growth come from if populations shrink? China peaked in 2010 and will have only half as many people in 2050 as now.

What chand1986 wrote is also true. It is external shocks that caused the current inflation. The central banks can't do much about that.

Please do not respond to the ….. Thank you.

These are external shocks that have caused the current inflation. There is not much central banks can do about that.

The question arises why the media, driven by mainstream economists, insist that higher key interest rates are appropriate now.

This is even completely on topic: We see from the construction interest rates that this is an investment obstacle. Logical.

Do we really need this: fewer(!) investments? The idea behind such interest rate hikes is to stop a wage-price spiral by damping the economy.

But our economy is not even growing strongly. There is no spiral and none in sight either. So what should be dampened and why? When I find more insightful comments in a house-building forum than in the established media world, something is wrong.

That some trolls suddenly fully align with the mainstream line when it fits their worldview is the cherry on top.

I am about to buy the parental home soon and have the vague feeling I am hitting the most unfavorable time...

So if building applications for a single-family house in Germany already collapse by maybe 40 percent at a real interest rate of 3.5 percent, then that does indeed have an impact on price development.

Let's just look at strawberries and asparagus. Consumers have bought less due to lack of money. Prices for these products are already falling. 7 euros for a kilo of domestic quality asparagus hadn’t happened for a long time. So rising interest rates also mean falling prices.

It can therefore quite well happen that construction prices will collapse if interest rates continue to rise.
Of course, some things will shift. If I get 5 percent interest on savings deposits, then I simply have more money available.
With 200,000 euros in the savings account, that is 10,000 euros p.a. minus tax.

One of my investment properties is, let's say, worth 700,000 euros. I sell for 500,000 euros. I invest that at 5 percent. That makes 25,000 euros return with interest income. For that I save myself all the landlord hassle.

Let’s not forget the fraud and the cold expropriation of savers. Reduction of the pension level, losses with capital life insurance, no longer any possibility to calculate with interest income. Just 10 or 15 years ago many people had imagined their retirement differently.

There is still the possibility to take out financing at a low interest rate for 30 years.