Feasibility financing new construction (land + semi-detached house or semi-detached half)

It's not about being ready for demolition, but there is some wear and tear that needs to be repaired from the maintenance reserves. However, if you have hardly paid anything off (because the bank receives almost the entire installment in interest), then 30k of deferred maintenance significantly reduces the return. And some like to forget here that property prices can also fall. Especially when everyone already agrees that there is a bubble. The pool of applicants for such building plots is currently thinning out massively due to rising interest rates. With external financing of 600k and more, it makes a big difference whether the interest rate is at 1% or 2%. And the trend currently seems to be rising further, and the pool of potential buyers is drying up. The times you described, in which even the last wreck exploded in value, are probably over.

It's not about being rundown, but there is a certain amount of wear and tear that needs to be repaired from the maintenance reserves. However, if you have barely paid anything off (because the bank gets almost the entire installment as interest), then 30k in backlogged repairs drastically reduces the return.
And some people like to forget here that real estate prices can also fall. Especially when everyone already agrees that there is a bubble. The pool of applicants for such building plots is currently shrinking massively due to rising interest rates. With borrowed capital of 600k and more, it makes a big difference whether the interest rate is at 1% or 2%. And the trend currently seems to be rising further and the pool of potential buyers is drying up.
The times you describe, in which even the last rundown shack explodes in value, are probably over.

Is everyone really agreed that there is a bubble? Some massively overpriced rundown shack in the middle of nowhere probably won't sell so easily in the future. But here we are talking about an area where demand significantly exceeds supply and likely will continue to do so. Just because interest rates go up doesn’t mean the need for housing decreases. And rents won’t get any cheaper anyway with the current inflation.
So what alternative does the original poster have if he doesn’t want to continue living with three kids in 75 m²?

it is "inevitable"

of course they can stay on the 75sqm for a few more years, maybe save another 40-60-80 THOUSAND EUR.
then they will have more equity, but if prices are 100-200-300 THOUSAND EUR higher by then, what then?

how current is the housing situation in some metropolitan areas?
very tense, demand many times higher than supply

will more be built now if construction prices have increased by 10-20% in one year?
probably not

will more be built where interest rates have now risen sharply?
probably not

so the "tense housing situation" will probably not relax...

and what about the dilapidated houses:
there probably won’t be any more premiums for those (earlier: value: 400k, sold on the market for 500-600k!)
prices there will have to fall, because modernization of such houses for 100-200k (due to prices) is no longer feasible
but only maybe a little bit... there won’t be a crash of 10% or so

and what about the existing stock, the houses built in the last years (20 years)?
there will be further increases... at least to offset inflation... (and tense situation)

people who can maybe afford houses from 1 million on can probably pick and choose (because there are not many buyers for such a market)

but for the properties where the broad mass lies, it will continue to be difficult
(earlier I said: broad mass at 400k, now rather at 500k)

but what if the prices are then 100-200-300 THOUSAND EUR higher again, what then?

Prices can't rise that much more, because then really no one could afford a house anymore. Current prices are so absurd because of the back then cheap interest rates of 0.x %. Explanation follows shortly.

so the "tense housing situation" probably won't ease...

Yes, but at the earliest in 1-2 years. Currently, order books are still fully loaded. Precisely because interest rates were so cheap for a long time, many people could suddenly afford a house without equity. Then came the panic about rising interest rates and rising prices. The expiring KfW subsidies also really boosted sales again.

but for the properties where the broad mass exists, it will continue to be difficult (earlier I said: at 400k is the broad mass, now rather at 500k)

Exactly, and why was 400k the broad mass and now 500k? Because the mass of people buy and spend what they can afford at most per month. I keep saying it, the market regulates that. The limit is the ability to service capital, not the living area, the price, or anything else related to the property. Now with 2.5% interest rates, it goes sharply back down to 400k for the broad mass. The original poster had to painfully experience that already. He wrote in the opening post that 500€ more in interest has to be paid than shortly before. The only bad thing is that the city cannot and does not want to simply adapt the land costs. But as far as the house is concerned, waiting a bit would not be wrong now, because now the unfavorable situation is: full order books, risk premiums due to material, old high prices, and still high interest rates. A really nasty combination. Unfortunately, it will take at least 1-2 years until this settles again. Therefore, I stick to my opinion now to secure the land and build in a few years. Someone aptly wrote that you have to look closely at the exit clause in case construction then is not possible and one should have looked into another crystal ball instead.

Are we really all agreed that there is a bubble? Some massively overpriced wreck in the middle of nowhere probably won't sell so easily in the future. But here we are talking about an area where demand clearly exceeds supply and probably will continue to do so in the future

Take a look at Wendlingen. Wendlingen wouldn't be worth mentioning anywhere else. It's only this expensive because Stuttgart is within reach and much, much more expensive. There is no other reason. If things go badly in Stuttgart, the price in Wendlingen will fall to a normal level. There are plenty of possibilities for that. And yes, there are plenty of signs of a bubble. Apartments sold for 50 annual net rents and more. Extreme price increases in the last few years. If that doesn’t look like massive overvaluation, then it anticipates a pretty severe inflation. This cannot even remotely be explained by low interest rates or demographics alone

Prices can't rise much more because then really no one would be able to afford a house anymore. The current prices are so absurd due to the "back then" cheap interest rates of 0,x %. Explanation coming up.

Yes, but at the earliest in 1-2 years. Currently, order books are still packed. Exactly because interest rates were so cheap for a long time, suddenly many people could afford a house without equity. Then there was the panic about rising interest rates and rising prices. The expiring KfW subsidies then really boosted sales again.

Exactly, and why was 400k the mass market and now 500k? Because the mass of people buy and spend what they can afford per month at most. I keep saying this, the market regulates it that way. The limit is the debt service capability, not the living space, the price, or anything else related to the property.
Now with 2.5% interest, it’s going hard back down to 400k for the mass market. The OP already had to experience this painfully. He wrote in the original post that 500€ more interest had to be paid than shortly before.
The only bad thing is that the city can't and doesn't want to simply adjust the cost of the land. But regarding the house, waiting a bit wouldn't be wrong because now the unfavorable situation is: full order books, risk premiums due to materials, old high prices, and still high interest rates. A really nasty combination. Unfortunately, it will take at least 1-2 years until this settles again.
Therefore, I stick to my opinion now to secure the land and build in a few years. Someone fittingly wrote that one really has to look closely at the exit clause in case construction becomes impossible and one would have preferred to look into another crystal ball.

Or wages rise and a wage-price spiral occurs. At the current inflation rates, I wouldn't bet that a house costing 500k today will cost 400k in 1-2 years.

Especially in highly contested metropolitan areas, nothing speaks to me in favor of such a drastic price drop. Moreover, the OP is already buying the land below market value and would lose nothing even in the unlikely event of a price drop.

Also, I simply can't imagine that construction costs will be lower in 1-2 years than now. Hopefully, the chaos around supply bottlenecks and increased raw material prices will have settled, but labor costs will have risen further. Interest rates probably too.

One more important point, which has already been mentioned here: The OP is at an age where statistically speaking, the big wage jumps are still ahead. Therefore, Hyponex’s idea of initially low repayment makes quite a bit of sense.