House construction costs in 2024, 2025, or not at all?

Hello everyone,

at the moment, in times of rising interest rates and construction costs (with some friends in our circle who also want to build), we are asking ourselves whether we can even build in the foreseeable future. During my research, I came across this forum and am looking forward to exchanging opinions.

Our current framework conditions:

[*
m30, approx. €3,000 net, completed Bachelor's & Master's degrees in Marketing, permanent full-time employment in global marketing since the end of 2017, confirmed internet promotion next year (+ approx. 10% net salary)
[*]w29, approx. €2,000 net, full-time employment as a press officer since the end of 2018, currently limited until 12/31/2023; full-time position/conversion into an unlimited employment contract is already being prepared by the employer
[*]Children: no plans in the next 3-5 years, what happens afterward is still uncertain – parents have already promised their support in case the desire for children becomes urgent one day and if needed to help with financing

[*]Equity: unfortunately currently only about €10,000 available – I had a student loan of €42,000 which I fully repaid in 2021, in addition my Bafög loan up to the maximum repayment amount of €10,000 has also been fully repaid; both have unfortunately significantly reduced our/my equity. In hindsight, I am glad I took out the student loan and completed my studies – I would do it the same way again.

[*]Current expenses: approx. €700 warm rent including electricity (65sqm apartment), further expenses:
[LIST]
[*]Car #1 (leasing): €190 / month
[*]Car #2 (financing): €260 / month, paid off with current installment by early 2025
[LIST]
[*]Since we live in the countryside and both have 30-40 km commutes, we unfortunately depend on two cars; public transport here is almost non-existent or not to the extent that commuting would make sense for us.


[*]€400-600 / month are currently saved (2 ETF savings plans / overnight money; sometimes more, sometimes less)
[*]No other liabilities or loans.
[*]We go on vacation with the dog once a year – as cheaply as possible in the mountains or at the sea, small Airbnb, maximum €1000. We would give this up in the future as well.

[*

Desired plot was bought/financed by the municipality in 2022 (new development area with 13 plots): 799 sqm, €100/sqm fully developed -> €80,000 cost


[*]Current repayment / month: €700, should be increased to €1000-1200 soon if it were up to me, variable loan through the house bank (in hindsight we could also have fixed it for 1-2 years, but hindsight is always 20/20)
[*]Current remaining debt: about €65,000, special repayments and full redemption possible at any time free of charge according to the contract


[*]House wish: standard; approx. 140sqm, fenced garden with small terrace, carport, no frills like smart home, photovoltaic system would be great of course, but it would have to fit into a possible overall budget.

[*]There will unfortunately be no inheritance from either her or my parents. Her father passed away in 2015, all currently renting. Overall, neither of us comes from financially well-off families, so I believe we are more cautious in our financial consumption and try everything to somehow realize our dream of building a house one day. My mother and her partner would be able to support us with about €25,000 for a possible house construction (a drop in the ocean, I know).

In our new development area, there are currently four houses (or still under construction), all builders had already finalized financing at the end of 2021/beginning of 2022 and were able to secure favorable interest rates. We have reserved or bought the fifth plot, all other eight plots were temporarily reserved in mid/end 2022 but were not taken by interested builders – primarily due to interest rates & construction costs. For us, this also means something good: the municipality waives the contractually stipulated construction deadline with completion in June 2027 (shell June 2025) and allows us to "overrun" by at least 3 years. We already have this in writing and a municipality representative recently told me that they had imagined things differently and expected to have sold all plots definitively by the end of 2022.

Do we have a chance or are the house construction costs exorbitant? I look forward to your experiences!

Best regards Sven

There is a pinned questionnaire that should be filled out as much as possible with information.

You already have some basics, but much is still missing.

What stands out...
Desire to have children: will it only be considered in 3-5 years whether to have a child? Or are there already tendencies?

You only have an annual vacation budget of €1,000. And you want to cut that? One still has to live! If it then fails due to financing, perhaps one has to consider where the priorities in life lie.

Where is the building supposed to take place at all? Rural can mean the Munich metropolitan area or the East German provinces.

Very rough...
3,000x140 + 10% incidental costs = 462,000
65,000 remaining debt
525,000 € financing
3%, 30 years full repayment --> €2,213 installment

Even with the salary increase, you are at more than 40% costs for the loan. And that’s cold!
And without consideration of parental leave or similar...

Thank you for your feedback! I actually saw the questionnaire too late, sorry about that. There is a desire to have children, yes - not today, not tomorrow, but in 3-5 years if everything goes well (1-2 children). The house is planned to be built in East Hesse.

Otherwise, we have already discussed within the family that the parents would "pay" for our land so that we would start the house financing with 0 euros "debt" and ownership of the land. But that would have to be discussed again at the appropriate time if necessary...

Friends of ours are currently building nearby; they ended up with a payment of €2,100, a net income of about 6k, and equity of €40,000 - tight but they are following through with it. The other madness in our circle of friends: a couple with about 8k net income is financing a 187 sqm city villa soon at €3,300/month without having saved much equity. For those who can afford it and where the bank agrees.

Thank you for your feedback! I actually saw the questionnaire too late, sorry for that. The desire to have children is there, yes - not today, not tomorrow, but in 3-5 years if all goes well (1-2 children). The house is planned to be built in East Hesse.

Otherwise, we have already discussed within the family that the parents would "pay" for our plot of land so that we could start the house financing with 0 euros "debt" and ownership of the land. But that would need to be discussed again at the appropriate time...

Friends of ours are currently building nearby; they ended up with a 2,100 € mortgage rate, net income is about 6k, and equity was 40,000 € - tight but they are going through with it. Another crazy thing in our circle of friends: a couple with about 8k net finance a 187sqm city villa soon for 3,300 € / month without having saved much equity. If you can afford it and the bank agrees.

Given your conditions, I actually see things rather bleak in the current phase, or rather, you wouldn’t be doing yourselves any favors...

The interest rate phase is too harsh, and with the still relatively high construction prices, it’s difficult for you to significantly repay the loan at all.

In my opinion, you simply need an extra 1,000€ net income – which could save your butt over the next few years and ultimately cushion the interest rate level somewhat. With a household net income of 5k and no equity, it is very difficult to build a house in the current phase.

If you then want to have children in 3 years and cannot realize this wish due to financial reasons, that is far worse than not being able to build a house at the moment.

Friends of ours are currently building nearby; they ended up with a €2,100 payment, net income is about 6k, and they had €40,000 in equity – tight, but they are going through with it. The other madness in our circle of friends: a couple with about 8k net income is financing a 187sqm city villa for €3,300/month soon without having saved much equity. If you can afford it and the bank agrees.

Do you find these two financing structures so bad?
The first friends still have about €4,000 left for living expenses and additional costs. You, assuming the friends have no further loans, have a smaller budget for that.
The second friends even have €4,700 left for living expenses and additional costs. That is significantly more than you have.
Now I'll ask bluntly how you could even afford your life at all. That's crazy, living with so little money.

You have to see the relations, and there your friends are much better off than you.

But back to your question. Whether you will be able to build depends on three factors.
1. Interest rate development
==> Here I do not see any improvement on the market for 2024/2025.
2. Creditworthiness
==> With a net income of €5,000 and according to your listing only €1,850 for rent and financing + €400-600 saving rate, I see that you – to put it bluntly – live beyond your means for a house construction wish. Spending €2,500 every month does not fit your wish. With that income, a saving rate of at least €2,000 per month should be possible = €50k in two years.
3. Desired house
==> Does it have to be a generous 140sqm? One (family with child) can also live wonderfully on 115sqm without being sad. And that immediately makes a house almost €100k cheaper = currently about €500/month saved in payments.

For point 1 you cannot act. Points 2 and 3 lie in your hands.

So yes, you can build. But no, not the way you live now and with what your wishes are.

If no children are planned/wished for and you want to live together as a couple for your whole life, you can get yourselves the biggest house.
That is exactly the point...

The critical threshold only comes when children come into play. Parental leave, costs for the children, etc... some pretty tough years are coming your way - you always have to be aware of that.

That’s what I wanted to get at.

With your circumstances AND the desire to have children, I would "not yet" start the project.

is right. You need to put a lot more money aside. 50k in 2 years should easily be doable with your salaries if you have the dream of owning a home. That will certainly help you already then.