Plan: House construction in 5-10 years

Good morning everyone!

My girlfriend and I (26 and 27 years old) are currently thinking about what the future could look like. This of course includes investing in a property. In the future, we are planning to build a house, but only in 5-10 years. For the meantime from now on, we are both a bit confused. Due to lack of knowledge, I have not been able to save much equity. I’ll summarize it briefly for both of us:

Income, net: about €3,200, secure income, both public service, I will be a civil servant in the future
I, building savings contract from 2013: about €4,000, monthly €150
She, building savings contract: about €4,000, monthly €150

Currently, we live in my parents’ house in a separate apartment for €450 warm rent. However, we plan to move out. Since we only want to commit ourselves to a house later, for now only an apartment (3 rooms, from 70 sqm) is an option. We have looked around the rental market a bit and have come to the conclusion that an apartment should cost a maximum of €500 cold rent plus the usual additional costs.
On the other hand, I rather hold the opinion that every rent payment is wasted money and, given the current interest rates, I have thrown a "purchase of an apartment" (about €130,000 including additional costs) into the ring. In that case, the repayment could be seen as saving capital and used as equity when reselling.

How does one manage to accumulate as much equity as possible in the coming years? Which type of living (rental apartment vs. condominium) do you consider sensible for the period (5-10 years)? Have you had similar experiences, learned from them, and are now builders of your own dream?

I would be very grateful for suggestions, tips, and ideas!

Best regards

Which region in Lower Saxony? I know many where you certainly won’t have any value appreciation in 10 years. There are long-term population growth forecasts for each district. Please look carefully before you buy anything (especially if only for speculation). If we had the solution with 10% return without risk in the current financial market, we certainly wouldn’t be here in the forum. Buy stocks? Put the money in a daily account, invest in a solar system, Indian biotech industry, copper? The only tip: every euro you don’t spend you have saved, what it will be worth in 10 years no one can tell you.

Thanks in advance for the reply!
It concerns the northwestern region of Hannover, about 20km to the city center of the state capital...

How do you go about accumulating as much equity as possible in the coming years? Which living option (rental apartment vs. condominium ownership) do you consider sensible over the period (5-10 years)?

Over 5 to 10 years, only saving makes sense. Stocks, etc., are ruled out due to the short term. So daily money accounts, fixed deposits, savings bonds (savings bond ladder). Building savings contracts need to be reviewed, as they incur fees. If there are no interest rates anyway, you have to pay even more attention to costs! Maximize income, minimize expenses (including costs related to investments)! I don’t see other options (possibly inheritance).

With a condominium, you put everything on one card (compare to stocks). The increase in value is unknown! The additional costs are lost/burned. I would rent.

Shares etc. are ruled out due to the short duration

Well, I don't consider 5-10 years too short to invest in stocks. Currently, the entry point is bad and I wouldn't invest fresh now, but 5-10 years is definitely a horizon in which you can build capital "relatively risk-free" with the right stocks.

Please calculate the apartment costs exactly:

Assuming you bring approximately €20,000 equity in addition to the incidental purchase costs (assumed 10% = €13,000).
The loan over 5 years has an estimated average balance of €100,000, with an interest rate of 2%, resulting in approx. €10,000 interest costs over 5 years.
In return, you miss out on the interest on the equity €33,000 x 1.5% = around €2,500 (interest rate for 5-year fixed deposit).
In addition, there would also be house costs that tenants do not have to pay (Hausgeld), e.g. €150/month.

For these €34,500 in costs, you could live in an apartment for 69 months. Only after that would you effectively build capital under the above conditions.
For 5 years, the risk would be too high for me. If it is more like 10 years, on the other hand, it could make sense, provided the size of the apartment also fits with the family planning.