Land purchase and house construction too risky in the current situation?

You honestly scare me a little with your predictions, etc.

That's probably why he's already history again :cool: ... Nobody is supposed to scare you!

So in my entire existence, the Sparkasse has never sent me an email saying that they expect interest rates to continue rising and that I should consider a building savings contract …. Sparkasse Munich! Are they now also conspiracy theorists?!

So far in my entire existence, the Sparkasse has never emailed me saying that they expect interest rates to continue rising and that I should consider a home savings contract …. Sparkasse Munich! Are they conspiracy theorists now too?!

Well, the Sparkassen have always tried to sell building savings contracts :-) And to cancel the old ones by forbidden means.

Whether I would stubbornly insist somewhere that inflation is clearly going down - I don't know. Where the FED is supposed to put the brakes is also not entirely clear to me. What is certain, however, is that the economy is currently declining. The recession is coming, and with it also the inflation brake. That's why bonds are being bought and their interest rates are falling. Leaving aside the Cassandra calls - "winter is coming." After that, we will know more.

What we already know - worldwide, the boom phase of the real estate cycle is coming to an end. Reports on this come from AU, CN, US, GB and many countries in the EU.

That was more related to the USA and yes, the recession is imminent there and here in Europe.

It is firmly expected that the FED will have to cut interest rates again in the spring.

It is firmly expected that the FED will have to cut interest rates again in the spring.

"Man" must surely be some money blogs and mega traders who would still like to unload their losses with the principle of hope? Bullwhip-Twitter? Sounds like pretty alternative facts.

Powell has quite clearly said that the priority is to bring down inflation, even at the cost of a recession.

Hi,

we are in a similar situation (searched for a long time, bought the plot at the end of 2021, have planned and put out to tender a lot with the architect up to now, both high earners, mid-30s, decent equity and an 8-month-old son, …) and maybe our experiences can help you. Sorry in advance for the long message.

First: if I were you, I would do it sooner rather than later. Ultimately, the house for you (as for us) seems to be part of the life model (home, oasis of well-being) with the family. If you wait any longer, you lose parts of this time.
In addition, inflation is not only working against you but also for you. A high rate now takes up significantly less of the monthly disposable net income after a few years of salary inflation. Overall, I can only advise to engage intensively with the planning; otherwise, many things you actually wanted cannot be realized later during construction due to cost reasons.

A few experiences regarding planning/costs:
- Better plan with minimal personal contributions. We cleared out and gutted an existing property; compared to the actual construction, it was a trivial task, yet still a lot of effort to save some costs. With a child it is no longer so easy, and besides, you actually want to spend the time beyond work with the child (which is a lot of fun!). The planning of the construction itself already takes up a considerable part of our free time every weekend.
- Indeed, do not forget incidental building costs and work through what all will come - not insignificant.
- Instead of calculating with 2,600 euros per sqm or a rough statement from the builder, it’s better to write down your ideas by trade and determine costs individually. At least for the trades that are difficult to estimate roughly because they depend heavily on individual ideas. We currently get quotes pretty quickly, and unfortunately, one can see a big difference in some trades compared to rough estimates (especially technical equipment (heating, electrical, ventilation, etc.); you should have your ideas estimated, also windows, floor coverings; some other trades can be estimated roughly with a clear conscience). We have experienced that high standards are very individually interpreted in the end and should be concretized in advance to avoid unpleasant surprises later.
- Think about how you can proceed ‘modularly’ if the construction turns out to be significantly more expensive than planned during the building time (e.g., finish later like garage, garden, attic/cellar expansion or a different quality of flooring on the upper floor/attic/children’s room…); that creates flexibility and leeway; important: don’t remove everything modular in advance.
- Financing: we only financed once we had a building permit. Since we are building in an area without a development plan, I would do it the same way again. Otherwise, in the worst case, the loan contract is invalid and must be unwound at a high cost. With a development plan, you can certainly be much more relaxed. Definitely go to the building authority yourself and personally with the plans before you sign the loan contract. This is not a guarantee but a guidance.
- We have had good experiences with savings banks from structurally weaker regions. They offered a very fair interest rate because such financing of this size is rarer there (yes, I negotiated with all common financial intermediaries and also approached some other banks directly).
- The current workload of the craftsmen is very high; it is difficult to get free capacities; however, it will improve significantly soon in many trades (especially those dependent on new construction). I work a lot in the chemical industry with building materials as a core customer group. Incoming orders among customers are dropping significantly - this will have a clear impact on capacity utilization; so it’s worth looking for a forward-looking craftsman/builder.
- Many people keep advising against a cellar, which is certainly correct financially. We both grew up with a cellar, have precise usage ideas, and don’t want to miss it in family life. So think about what the cellar represents for you.

hope this helps a bit