Construction costs are currently skyrocketing

Back to the roots: Friends of mine are currently building, price escalation clause, 100k€ more expensive (is that allowed???), bank is being difficult about the financing! What can be done? I don't know if building smaller still works… it's a drama! Both 30, earn well, equity so-so ☹

Impossible to answer in general. What was the house supposed to cost? It makes a difference whether a 350k now costs 450k or if a 1 million house now costs 1.1 million.

In Germany, hundreds of thousands, if not millions, of apartments are vacant. In East Germany, demolition premiums for housing are currently still being paid by the state as subsidies. And here, there is vigorous demolition.

Therefore, I do not see the shortage of housing in Germany. You just have to guide people a bit. Needs-based accommodation. And if the state pays the rent, then it also determines where it pays the rent.

And so both migrants as well as Hartz IV recipients and others all go to the large urban areas. The nurse in Munich cannot find an apartment because an unemployed person lives near the hospital. Expressed in an exaggerated way.

Rents in Berlin are rising boundlessly while hundreds of apartments are being demolished in Neustrelitz. There is simply no housing allocation. The economy could have been directed to structurally weak areas. There is no DAX company in all of East Germany. But there is one in Munich.

If offensive family policy had been pursued 30 years ago instead of mass immigration, then we would not have a demographic problem today. Because even the German welfare state is not infinitely sustainable. The limits of those who create valuable work have long been reached through taxes and levies. The devaluation of savings and inflation do the rest.

And what was the breaking news from Focus today? Inflation has surprisingly!!! fallen to 7.6 percent in June. That’s true too. The gas price has fallen.

One could have directed the economy into structurally weak areas. There is no DAX company in all of East Germany. But there is one in Munich.

Tesla is in Brandenburg, Intel is coming to Magdeburg. What a silly narrative you are trying to feed. And don’t come to me now with: "But those are not DAX companies." Fun fact: We proud Bavarians unsuccessfully tried to attract Intel with Schweinfurt and Landsberg. Too bad, Söder/Aiwanger.

And so migrants as well as Hartz IV recipients and others all go to the big metropolitan areas. The nurse in Munich can’t find an apartment because an unemployed person lives at the hospital. Exaggeratedly put.

Your pub talk is below even tabloid level and close to Nazi propaganda. It is barely bearable.

Back to the roots: Acquaintances of mine are currently building, price escalation clause,

How does the financing with the price escalation clause work? I mean, does the bank agree to that? If yes, what does the contract look like – total budget x + 100k?

Back to the roots: Friends of mine are currently building, price escalation clause, 100k€ more expensive (is that allowed???), bank is being difficult about the financing! What can be done? I don’t know if building smaller still works… it’s a drama! Both are 30, earn well, equity is so-so ☹

I have to admit we are also budgeting for 100k more. 510k was our offer. Material price increases can be passed on by the general contractor 1:1 up until the start of construction against disclosure of the calculation/offers/etc. After that, meaning from the start of construction, the risk is contractually agreed to be borne by the general contractor. So I don’t know it any other way. And I don’t even find nearly 20% extremely crazy, depending on what time horizon you consider and what has happened globally in the meantime. But to answer your question specifically, a bit more information is needed. Were price increases, for example, tied to the construction price index or how are the 100k composed? Also the project volume, as a previous speaker already mentioned, plays a role, and much more. *Edit: I would not have agreed to a price escalation clause during the construction period, because this can lead to a deadlock situation like with the friends. Exactly because otherwise additional financing could not be supported by the bank and in the worst case even a sale threatens. Now it probably remains only to check with the family for money, omit landscaping, drastically cut furniture, reverse upgrades, and last but not least stay positive.

How does financing with the price adjustment clause work? I mean, does the bank agree to it? If yes, what does the contract look like - total budget x + 100k?

The house was supposed to cost €500K, the land was purchased quite cheaply. Due to the increased costs, the loan is now quite expensive. The question is whether this is compatible with a reasonable monthly burden. From the bank's perspective. I will stay on it and ask for details!