House construction 2024, affordable with little equity?

Ok, the little things really add up quite a bit. Still, you should look at where you can reduce costs. With 95% home office, maybe even get rid of a car. You pay €1000 for two cars. By getting rid, I don’t mean replacing them with a company car. Better more salary instead of a company car.

Yes, unfortunately, it really does add up quite a bit. I had that thought too when the lease expires in 2023, the only problem is: there are already days when both of us have to go to the office. One 35 km in one direction, the other 30 km in the other direction. With one car it can quickly cause problems, especially since we absolutely don’t have suitable public transport infrastructure here. :( But yes, we will definitely take another look at what can be saved and where!

We, like many others, have the dream of owning our own house – but right now it’s quite frightening when you see how quickly interest rates and construction costs are developing or have developed in recent weeks and months.

I usually stay almost completely out of the financing threads here. Regarding the fundamental desire to build, in my opinion it is definitely not the end of the story – if the average builder would get off his high horse that a home must obviously be one point something times as large as the usual rented accommodations and styled three octaves above that standard. There is still a lot of room for improvement in just these two areas.

800 sqm of land is – probably from a dog’s point of view just a comfortable kennel – for current conditions princely and thus rather above average for your circumstances (and for a 140 sqm living space goal). The partner is still under 30, you presumably similarly, and children "not for the next five to six years" hence not school-age for a long time yet. From my point of view these are (nearly textbook) conditions for initially a transitional house ("The transitional house: a springboard").

I can absolutely understand the "if you haven’t learned to save by 30" thing and basically see it the same way, [...] saving unfortunately wasn’t possible before, as much as I would have liked to.

A car financed over several years I see at first as a counter-indicator.

Good evening,

first of all, people shouldn’t be unsettled or "judged" if they haven’t built up a huge amount of equity by their late 20s... we don’t know when they finished their training, studies, etc., and if they’ve only been working for 1-3 years and invested the money in furnishing their apartment, then that’s just how it is.

my monthly expenses are about €4,000 (including the installment for the land)

with €600 monthly and 1% variable interest (which will probably change very soon...), the repayment here should be around 8%, which is good.
because that way you also build equity by paying off the debt.

if construction prices increase in the next few years (just look at how land prices have risen in the neighborhood in recent years) and we assume only 25-50% of the increase here (so instead of 10-20% p.a., only 2.5-10% p.a.), then you also build equity from the appreciation of the land.

let’s assume the land is worth €110,000 in 2024,
and you have paid off €50,000 of it by then, so you already have €60,000 equity with these conditions for building the house; also there is no real estate transfer tax here, only some fees for the notary/court for the registration of the land charges.

with the ETFs you can also build up some equity in 2 years, which would be roughly €30,000.

if possible, you can also increase your income a bit, maybe end up around €5,200-5,500.

it would be good if, when the leasing rates end, you could also save that money.

then the situation would look like this:
early 30s and a solid €100,000 equity!
and it already looks different.

many are writing here that the bubble will burst and many craftsmen will be unemployed in 2 years ;)
so prices for building will also have to go down.
so if you calculate €3,000 per sqm depending on the region (140 sqm = €420,000 PLUS ancillary building costs) then it should be around €350,000 or even lower in 2024/25 (if everything goes downhill in Germany... and no one wants to pay those utopian prices anymore).
*irony off*

I’ve mentioned this before, but I think maybe the craftsmen won’t charge those utopian prices any longer, but inflation, increased energy prices (and therefore higher material production costs) will nullify those savings again?
(which in turn means that real estate prices won’t crash much in the next years!!!)

so let’s calculate calmly:
€50,000 remaining debt on the land
€420,000 house costs
€50,000 ancillary building costs
kitchen, outdoor facilities etc. €50,000
in total €570,000
you will have built some equity. So you will probably need a loan of around €500,000 - €550,000 depending on prices.
with 3% interest and 2% repayment, the installment would be €2,000 - €2,300
(for which the rent (€600) + land (€600) no longer apply)
so it would be an additional burden of €1,000 more than currently... okay, you could skip the saving (€600)

still manageable with some restrictions, but if a child comes and parental allowance then causes a monthly €700 gap in income, it is really, really tight.
(then please come to me in 2024 so that this can be taken into account in the financing and the monthly disposable income remains the same).

and congratulations on the land... good capital investment given the current inflation!

You already have the most important thing. A suitable plot of land. The more of it you pay for, the higher your equity. And perhaps the building obligation can be renegotiated in view of the crisis.

Unfortunately, no one has a crystal ball.

Many thanks, especially , for the very detailed response! :) That gives me/us a bit more courage again, even though we know it won't be easy.

In the coming weeks and months, we will adjust all the levers again and see where we can save something - even if it's just 5 euros. And then we'll just see where we stand today + 12 or + 18 months!

It might be advisable to possibly complete the house planning etc. and have everything ready in the drawer.

Then, it's also recommended to start watching the interest rates steadily earlier (SWAP as an example) to see where the journey is headed.

Currently, no one can say where we will stand in 1-2 years, whether at 2%, 3%, or even 4%.