Dream of a house: realistic or just daydreaming?

400k for house and land? I’m not familiar with the area, but I can’t imagine that’s feasible within the Düsseldorf area, can it?

Nice bias. Real estate prices have been rising for 10 years. So you just can’t lose on it. Well.

Actually the last 100 years. But that’s not the topic at all.

A new build is like a new car. Right after the first occupancy, at least 10% of the value is gone in my opinion.

That’s the advantage of a new build. Right after first occupancy, no money is initially lost. There is a reason why people commonly speak of “concrete gold.”

Plus purchase incidental costs and prepayment penalties.

Purchase incidental costs are correct, prepayment penalties not. Property exchange is the magic word. Reduces prepayment penalties to €0.

A few thousand? Increased prices lead to higher loans. I don’t have to explain that to you. Calculate the prepayment penalty, e.g. €400,000 loan that has been running for 4 years. A few tens of thousands is more like it.

As I said, you can exclude the prepayment penalty. At the moment it is rather a triad. Not increased prices = increased loans. Falling interest rates = higher loans possible = higher prices.
Maybe a few words about prepayment penalties after all. In the current ultra-low interest phase it is likely that interest rates will rise again (at least slightly) in the next few years. Likewise, reinvestment yields. This will mean that for loans concluded in the last/maybe also the next two years there will be no prepayment penalty in the future. The banks will be glad that the cheap money is coming back. That is at least my personal interest rate forecast for the next 5 years.

400k for house and land?
I’m not familiar with the area, but I can’t imagine that being feasible within the Düsseldorf area, can it?

If we take the Düsseldorf area as 30-45 minutes driving time to the city center, that is very tight for a new build but still just possible (small plot or semi-detached house). For existing properties it starts at €175k depending on condition, with €400k you can already get something nice.

Hey Trinity

Matrix sends regards )) I have often used that nickname too...

so you should have bought preferably yesterday, rather than today or tomorrow.

I was at a client’s yesterday, they are currently planning the follow-up financing. They bought a little house in 2014 in the metropolitan area of the Rhineland, back then for 210,000 EUR. The financial circumstances were more critical than today. Back then they even financed the incidental costs through Hanseatic etc.
today, almost 5 years later, the "little house" according to my valuation is worth between 330,000 and 350,000 EUR, for fun I had it appraised by the local Sparkasse, and they confirmed the value at 340,000 EUR. That means if the Sparkasse values it at 340k, one can offer it on the market for 400k, and they would sell it immediately!

but what I want to get at?
many think that we have a "bubble" in the market... I rather say, there is still a long way to go before a bubble... i.e.
1) in the next 2-3 years the prices will continue to rise as much as, or almost as much as in the last 5 years! because demand is still high and there is too little living space!
2) interest rates will remain at such a favorable level in the coming years, thus demand stays that high
3) in 3-5 years the market will cool down, but prices will still be allowed to rise more than inflation (inflation currently in the EU area: 1.5-2%!!!!)
4) thus currently you pay the bank less interest than the inflation rate!
why is that?
in the 80s and 90s there were many years with hardly any price increases in real estate, despite higher inflation... and we have been compensating that for years....

two years ago I told my wife’s best friends: huh, the little house you want to buy in Bergisch Gladbach (near Cologne!) is priced over 100,000 EUR above its actual value.... so I would be a bit more cautious...
Today, 2 years later, they could ask for 200,000 EUR more, and would sell it immediately because people would be fighting over it!

this is not an encouragement to pay far above value! but depending on the region some premiums are gladly accepted.

in your case in Düsseldorf I can say: a few years ago everyone bought everything in Neuss, because it’s not far from Düsseldorf, and prices were still relatively reasonable... not anymore today.
I think for 400,000 EUR you will hardly find a KfW-40 house with pool, garage etc. there... so either you have to push the budget higher or invest more!

PS. I live myself near Bonn, 10 km to the city border, and here plot prices are also beyond good and evil, even for existing properties. If you want something reasonable, relatively new, you have to invest 400,000 EUR for a small terraced house with 250 sqm plot.
Young semi-detached houses (so max. 5 years old, 160 sqm living space, 250-350 sqm plot) start at 600,000 EUR....
and new builds for condominiums here are also over 4,000 EUR per sqm!!!!

that is the reality...

Can someone explain the issue to me, I don't really understand it here. Are we already at the point in Germany where people with almost 100k annual income can no longer afford a self-used property? I don't think it has come to that yet.

Conclusion: If not you, then one must seriously ask: Who then?

Hey Trinity

Matrix sends its regards )) I also often used that nickname...

so you should have bought yesterday rather than today or tomorrow.

Was at a client yesterday, they are currently planning the follow-up financing. They bought a little house in the metropolitan area of the Rhineland in 2014, back then for 210,000 EUR. Financial circumstances were more critical than today. At that time, incidental costs were still financed through Hanseatic, etc.
Today, almost 5 years later, the "little house" according to my valuation is worth between 330,000 and 350,000 EUR, just for fun I had it appraised by the local Sparkasse, and they confirmed the value with 340,000 EUR. That means if the Sparkasse values it at 340k, you can offer it on the market for 400k, and they would sell it immediately!

But what I want to get at?
Many think that we have a "bubble" in the market... I rather say that a bubble is still far off... meaning:
1) in the next 2-3 years, prices will continue to rise like they have in the last 5 years! because demand is still high and there is too little living space!
2) interest rates will remain at a favorable level for the next few years, which keeps demand so high
3) in 3-5 years the market will cool down somewhat, but prices will still be allowed to rise more than inflation (current inflation in the EU area: 1.5-2%!!!!)
4) thus, currently you pay the bank less interest than the inflation rate!
Why is that?
In the 80s and 90s there were many years with hardly any price increases in real estate, despite higher inflation... and we have been catching up on that for years....

Two years ago I told my wife’s best friends: huh, the little house you want to buy in Bergisch Gladbach (near Cologne!) is priced over 100,000 EUR above its actual value.... so I’d be a bit more cautious there...
Today, 2 years later, they can ask for 200,000 EUR more and would sell it immediately because people would be fighting over it!

This is not an encouragement to pay way above the value! However, depending on the region, people gladly accept some premiums.

Here in Düsseldorf I can say: a few years ago everyone bought everything in Neuss because it’s not far from Düsseldorf and prices were still relatively reasonable... not anymore today.
I think that for 400,000, as a KfW-40 house, with pool, garage, etc., you will hardly find anything... so either push your budget higher or invest more!

PS. I live near Bonn myself, 10 km from the city limit, and here plot prices are also beyond good and evil, even for existing properties. If you want something reasonable, relatively new, you have to invest 400,000 EUR for a small terraced house with 250 sqm plot.
Young semi-detached houses (max. 5 years old, 160 sqm living space, 250-350 sqm plot) start at 600,000 EUR...
and for new-build condominiums, we’re also over 4,000 EUR per sqm here!!!!

That’s the reality...

Hmm sounds good and hopefully there is a lot of truth to it!

However, I only read about the pendulum swing in one direction. Never the other...

House now worth 200k more than 5 years ago etc... I believe all that!

But it can also go in the other direction. One should never forget that.

Because if it were certain that prices would rise in the next 5-10 years, absolutely everyone would immediately take out a loan and build/buy.

What can then happen we saw several years ago in the States...

Anything can happen, nothing must. As I said... many roads lead to Rome.

Can someone explain the problem to me? I really don’t understand it here. Are we in Germany already at the point where people with almost 100k annual income can no longer afford a home they use themselves?

No, we are not. With that income, you can afford a property almost everywhere. In Munich, a bit smaller, in the countryside more luxurious. Prices are indeed high (Munich has the hottest real estate bubble in the world, if you believe the latest studies), but money is simply dirt cheap. In this respect, the overall situation is not much different from the 80s or whenever.