House construction financing, planning in 2025 - Southeast Bavaria

Hello everyone,
my wife (29/30 years old) and I want to build a house in the near future. Fortunately, we already have a plot of land; there is no build obligation here due to a gift from the family. The postal code area is 84xxx, so Southeast Bavaria. We started our house planning at the beginning of 2022, but at that time we decided against it due to the exploding interest rates + construction costs + lack of fixed-price offers.

Current situation:
We have both been working in our respective companies since our apprenticeships and have been able to raise our salaries to a good level over the past few years through further training, etc. Specifically: for me 3,200€ net, for my wife 2,100€. A total of 5,300€, which will still increase in the coming years due to already agreed salary increases. Then the equity capital of around 120K will also increase further to improve the equity ratio.

Planned house

[*]Single-family house approx. 150 m²
[*]fully basement (we both want this, even though it's expensive)
[*]ground floor + upper floor
[*]Architect's plan + submission plan already available
[*]KfW 55 standard, KfW 40 probably significantly more expensive
[*]everything that makes sense will be done by ourselves (electrical work, underfloor heating, water/sewage, insulation, painting, etc.) Friendly skilled workers are available.

First offer (local savings bank)

[*]470,000€ loan in 2 parts of 235,000€ each (550K - 80K equity, rest equity still buffer)
[*]effective interest rate 1: 3.56% with 10 years fixed interest
[*]effective interest rate 2: 3.97% with 30 years fixed interest
[*]total installment: 1,930€ monthly

Now my questions for you:

[*]Do you consider the construction costs of 550,000€ (including 50K buffer) realistic?
[*]How do you see the interest rate development for construction financing in the next 12 months? In view of the ECB interest rate cuts, from my point of view, they should still fall somewhat.
[*]Are there currently any suitable funding programs in Bavaria? Within the framework of BayernLabo, we unfortunately earn too well in terms of salary. KfW now only promotes the KfW 40 standard with attractive conditions.
[*]Do you see falling construction costs on the market? At the beginning of our planning (early 2022) construction costs rose extremely. Is this somewhat lower now?

Thank you in advance for your answers.

Do you consider construction costs of €550,000 (including a €50K buffer) realistic?

With a lot of personal contribution, yes (are incidental construction costs included?). What does the site say about the ground works?

How do you see interest rate developments for construction financing over the next 12 months? In view of the ECB interest rate cuts, they should still fall somewhat from my point of view.

The crystal ball is currently cloudy. But the interest rate cuts that have been announced are already reflected in the current rates. Therefore, only a sideways movement is to be expected, but no significant decreases.

Are there currently suitable funding offers in Bavaria? As part of the Bayernlabo, we (unfortunately) earn too well in terms of salary. KfW only funds KfW 40 standard with attractive conditions anymore.

No idea about Bavaria. But the surcharge for KfW 40 shouldn’t be that large, as 40 is now the standard many companies have prepared for.

Do you see falling construction costs in the market? At the beginning of our planning (early 2022), construction costs rose extremely. Has it come down somewhat by now?

Sort of. Definitely falling raw material prices compared to the peak prices. But wages are rising (the IG Bau currently demands €500 more per month for every employee). Many general contractors whose prices I see (commercially) are currently happy about inquiries and have returned to a better level regarding both availability and price. However, this may not apply to the small local craftsman, who still has full order books. Overall, the industry no longer expects major price reductions.

I refrain from all numerical evaluations in discussions about construction financing. Therefore, only in principle: The relative attractiveness between remaining a renter and owning residential property will not shift significantly. The future remains (always, not only in 2024) uncertain and you do not want to bet, but to build. Wait tomorrow, act now! A runway clearance that was allowed to lapse two years ago will not today be under the sign of miraculously improved thermals. The house that can be built with the same money will get smaller with every semester of waiting. Choosing a higher energy efficiency house standard than personally sensible will not be financially worthwhile today or tomorrow. The subsidies are not a magic potion, but on average compensate for the additional effort (because they are calculated by hordes of certified insurance mathematicians for exactly that). Forget the crazy idea that own and friend contributions could be successfully set close to zero in the calculation. A two-year-old completed submission plan for an EH55 is still the best basis today for concretely clarifying what the thing costs. You will find here, via the search term "11ant Kellerregel," the way to the answer regarding what your plot says about the basement question, i.e., what it costs, for example, to want more basement than the plot allows. There you have a (possible, to be clarified) lever.