How does everyone afford a house?

Hi everyone,

I am new here because owning a home is becoming more and more of a topic for us. Especially since almost all of our friends are currently building/have built and are influencing us.

We are 26 and 31 years old and have a net income of just under 4,000 euros. I would actually consider that quite okay. Equity is barely available (max. 10,000 euros) because we were basically in training for a long time and simply didn’t have the time to save that much.
We haven’t been to the bank yet, but I calculated a loan amount myself: 280,000 euros with a term of 25 years and a monthly rate of 1,200 euros. Some might find the rate too low, but I considered that I might eventually not work full-time anymore to take care of the house and children. We also live quite well... go out to eat more often, go on vacation twice a year, etc. You can restrict yourself a little, but I somehow find living exclusively for the house downright pointless.

And from what I see with the land prices here (BaWü), I think: We somehow can’t afford a new build... but can that be true? How do all those other people do it? They are about the same age as us, have also been out of university for 3-5 years, and are building large, beautiful single-family homes (much bigger than I imagine ours) in great locations. And still continue to live without giving up leisure time, etc.
Am I just seeing the whole thing too rigidly? Or do we not actually earn as well as I thought? Or is it completely normal at mid-twenties/early thirties to have 50,000 euros saved up?

I’m confused.... and looking forward to your answers!

Thanks in advance and best regards!

As a couple, 5 years after graduation with 4000 € net, it probably depends on the profession whether that is a lot or a little. Just believe that people a) inherit / are supported b) pay higher installments - let's be honest, why do you need 2800 euros per month? c) do not live in BaWü.

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And looking at the land prices here in [BaWü], I think: We just can't really afford a new build... but could that be? How do all those other people do it?!

That's exactly what I'm wondering in my late 30s as well. Despite equity and secure jobs, you'd still have to borrow a huge chunk. And low interest rates or not, you still have to pay it back....

Maybe they all pay it off over 30 years and the installments are lower??

For two people, 5 years after graduation with €4000 net, it probably depends on the profession whether that is a lot or little.

Not related to the profession, but I would describe our income as average. And I always thought average income = average house. But somehow I have the feeling I'm quite wrong about that...

I just believe that people a) inherit / are supported b) pay higher installments - to be honest, why do you need €2800 per month? c) don’t live in BaWü..

Well, I have now compared with our circle of acquaintances who live around here. None of them have inherited or are supported. Some surely earn a bit more than we do, but not thousands of euros, and they also build houses with 200 sqm. I thought more like 130. Since they are the same age, I assumed they also calculate with a term until retirement. Everything else is somehow pointless. And what do we do with €2800 hmm... I had calculated €300 for additional costs, €300 for food, another €200 for food in the canteen. Then there are still mobiles, various insurances, two cars, €300 for leisure/clothing, €200 for savings (there can always be something with the house), another €200 for vacation. That leaves just under €1800 for the payment according to my calculation. But only as long as there is no child. If I then only work 60/70% and costs for the child/kindergarten etc. are added, those mentioned €1200 remain. I’m already calculating generously, but that’s better than severely miscalculating and struggling...

I think that in your early 30s, without children and with a degree under your belt, you can definitely have some savings, but it’s a matter of priorities. How important are vacation, the car, clothes, etc. to you?

My wife and I are about your age (a bit older) and by now have a single-family house in BaWü, have 2 children and a similar income. I also studied, but part-time (which of course had the advantage that I didn’t have to think about where to go on vacation because I needed that time for exams and preparations.... )
And still, we managed to contribute a third of our construction costs as equity.
We didn’t live poorly, at least not according to my subjective perception.

For me, it’s more of a mystery how you manage not to build up any equity under your circumstances.

Don’t take it personally. I don’t care how and what you spend your money on, I just wanted to show that you actually have the conditions to build up some equity.

According to your calculation, you spend, for example, €700 per month on cars and insurance. Even €2400 per year for vacation is already a considerable amount. Maybe people prioritize differently, or work with 1% repayment - just ask around among acquaintances - especially since with €1200 you can currently get €330,000 - with €1800 then already €495,000 (I wouldn’t advise it - but it would be possible).