Not paying off the house - dumb or sensible?

What you describe is a very common model in the UK and the USA - with one significant difference.
First, the similarity:

[*]You buy with a 100%+ mortgage and only start paying down the principal later. Both bank and buyer expect an increase in the house value. In Germany, we call this "speculating". In 2009, it was clear what happens when house prices fall and loans become due - some people then crash out of the system. The latter continues.

Now for the difference:

[*]Unlike your plan to buy something big right away, they start smaller there, sell in a favorable market situation, and buy the next bigger house - again under similar conditions. This way, you gradually move up to bigger houses and partially pay off the loan from capital gains. The remaining repayment is tackled once you have settled in "your" house.

Your idea to buy a bigger house directly with low running costs is appealing. The liquidity you gain is bought at a price because ultimately you pay significantly more for the same thing (interest and compound interest). If you don’t have the money for it fairly securely, you also take on the risk of old-age poverty or passing on debt. In Germany, this is considered unsound, but Germany is not the yardstick for everything.

What you describe is a very common model in the UK and the USA – with a significant difference.

It's probably my fault, but I don't understand where I wrote (or implicitly assumed) that I am speculating on rising prices? If we both work full-time, we will have paid off the house before retirement. However, since I want to keep the option open to work less or use the money for other purposes, I am initially planning with the remaining debt and wanted to check if I might have overlooked something. But so far, I wouldn't have considered this as gambling, since we could manage the necessary payments even in the case of parental allowance stress and would have a significant cushion again starting next year.

Or do you understand gambling as speculating that prices in prime city locations remain stable?!

So it would be a certain kind of "gambling" if a residual debt remains upon retirement after calculation. Then the sale must at least cover the residual debt. Anything beyond that would be saved money. Yes, you pay more interest, but yes, in that scenario you might exactly have the house you wanted without having to restrict yourself. In the worst case, you just walk away as if you had been renting. Inheriting debts... Well, the heirs can gladly refuse that. The last shirt has no pockets.

Just a quick note on the topic of inheriting debts... if they are debts, if a house is encumbered with €200,000 but worth €600,000, I am more than happy to inherit this! For one to leave debts to their children through a house purchase, quite a lot would have to happen (with properties in a good location).

Presumably it’s my fault, but I don’t understand where I wrote (or implicitly assumed) that I am speculating on rising prices?

You write about rising prices right in the 1st sentence and in the 1st bullet point in #1 and in the 2nd sentence about currently too high rates for paying off until retirement. Anyway, as an unshakable optimist, I have already mastered such constructions, so it’s possible. I have also already financially badly fallen flat on my face with such constructions. So it can also go wrong. My attitude: money comes and goes. Time goes and does not come back. Therefore, I am quite close to ideas like yours. In Germany, this sometimes meets with bewilderment.

Okay, then now I think I understand.

My impression is also that this (for me manageable) risk is taken rather rarely - on the other hand, I deal with it very intensively and work in the industry; for many, comparing different loan offers is already (understandably) difficult. And what here is rather cautious restraint due to lack of experience, in the Anglo-Saxon countries is rather the opposite, that they take the risk even if they do not understand it.