Is purchasing a house and complete renovation affordable?

Yes, of course you can do that. But then there is no buffer left for reserves and other types of retirement provision. If I also count the mortgage payment, service charges, insurance, retirement provision, and cars, it doesn’t look so good anymore.

The house is also a form of retirement provision. Just as it is now for grandma.

It is a retirement provision with a high concentration risk. If there is still enough room for further coverage and good reserves, then real estate is a good investment opportunity. No question. But the risk that self-occupied real estate represents in old age should not be ignored. Renovations from pension benefits when lacking the strength for own work is only one factor. But ultimately, these considerations about what will happen in 50 years obscure the current problem, namely that the targeted rate is a few hundred euros too high for the income. If more inheritances are sure to come in the future, then one can of course take such a risk. I am definitely in favor of owning real estate, but despite all the romance, the financial planning should fit. And I see a lot of romance here and a lot of fear of missing a last opportunity and less realism. The OP describes two scenarios: either buy the house now, or otherwise he will be evicted with his two unborn children from the expensive rented 3-room apartment. That does not read to me like a rational consideration of an investment of 700,000 euros.

Only that no loan of 700,000 euros has to be taken out here.

Almost the entire equity capital is parked there. And so it is a decision about the use of 700,000 euros. If the finished property reflects the value, it can be a sensible investment. I just wonder that nobody else is bothered by the fact that the installment would already be at just over 42% of the household income with the current double income. Add children into the mix and it gets really tight. Unless further funds can be expected, which we do not know.

Forget percentages of the net. What matters is what remains. And outside of parental leave, we're talking about well over €3000, and during parental leave still nearly €2000. That's enough for more than just noodles with ketchup.

Your optimism is admirable. But even among today's 30-year-olds, only very few have good chances of reaching 90 years old. You are spreading false facts based on feeling here. The average life expectancy for men/women is still around 80 years today. And unfortunately, from retirement on, for some people it goes downhill quickly. At 70 with a new hip, mowing the lawn and cleaning the house become more difficult. For many, life in the house is only a burden from 70 onwards. Of course, it is understandable that people do not want to admit this yet. But by 80, almost everyone belongs in an accessible apartment and no longer in a house if they want to live happily and carefree.

Between 70-80, one should rent a nice cruise ship and take a world trip...