Single-family house – new construction project from day one - and the planning begins

If the price does not move significantly downwards, we will probably shelve the construction project for 2-3 years and then deal with it again when the market has calmed down.

Yes, exactly. In 2 years, the situation will look very different. How do you come to that conclusion? Are you hoping that the Corona lockdown will lower prices? I wouldn't bet on that. Any other development that could reduce construction prices? I can't see any, and I fear that's wishful thinking. The banks will hardly raise interest rates after the crisis. And I also don't think that so many people dying from Corona now will suddenly leave houses empty everywhere.

Yes, exactly. In 2 years, the situation will look completely different.
How do you come to that conclusion? Are you hoping that the Corona lockdown will lower prices? I wouldn’t bet on that. Any other development that could lower construction prices? I don’t see anything, and I fear that is wishful thinking. The banks will hardly raise interest rates after the crisis. And I also don’t think so many people will die from Corona that suddenly houses will be empty everywhere.

I see it quite pragmatically...
If even we, with a monthly household income of 7,000 EUR and a total budget of 610,000 EUR, can no longer build affordably (price and performance in a reasonable proportion), then who else should be able to do so?

Currently, more than 10 million people in Germany are on short-time work. Some will be unemployed after this phase. The others will think three times about such a large investment. Prices will have to fall in the next 2-3 years for new builds and existing properties. Supply and demand determine the price. And this does not yet take into account that interest rates could just as well rise again. The spreads are already developing significantly upwards due to creditworthiness. The interest rate level is currently being artificially kept at rock bottom. If the ECB does not further intensify or even reduce its monetary policy measures (must; see BVG ruling), the construction industry will be finished.

The industry has been on the drug called "low interest rates" for the past 10 years. Everyone knows what withdrawal does to someone. I could imagine that a massive market cleanup will take place here in the medium term.

On the other hand, the interest rate level must continue to be artificially kept low to prevent state bankruptcies in Italy, Spain, and possibly France, so that the Euro and thus our financial and economic system can be saved. The consequence of this, however, would be that home ownership—especially new construction—in Germany becomes an absolute luxury good, which leads to fewer and fewer people being able to afford the fancy new single-family house... Here too, the market mechanism "supply and demand determine the price" applies.

We are building with a general contractor who manufactures the walls in the factory (solid wood). For the house, we are at about 2,450 euros per sqm and have a relatively good standard and kfw40 for that. And we are not building in the middle of nowhere but rather in the higher-priced Bavarian-Baden-Württemberg border area. So, I think there still has to be some room on the price!

Yes, exactly. In 2 years, the situation will look very different. How do you come to that? Are you hoping the Corona lockdown will lower prices? I wouldn’t bet on that. Any other development that could lower construction prices? I don’t see any and fear that it’s wishful thinking. After the crisis, banks will hardly raise interest rates. And I also don’t think that so many people will die from Corona now that houses suddenly stand empty everywhere.

The direction of prices depends on the ratio of optimists to pessimists. You follow the narrative in which the (paid) prices keep rising, there are no limits, and this time the cycle has no end – the bulls. They dominated for a very long time, and now a black swan came, bringing fear and doubt. Why do PMs constantly come with reports that prices on the portals continue to rise? Because the other side, the bears, are coming. The pessimists simply see that the world is heading into the biggest economic crisis in decades. Because international investors don’t build single-family homes. Because rental apartments in the current situation (even before Corona) are no longer really profitable. Because rents will no longer rise. Because companies no longer hire people, because everyone is saving. Everyone must judge for themselves whether 4%–10% cost/ “value increase” is real, or rather a bubble. Quite a lot has already been written about the price bubble (-inflation). Deflation, by the way, occurs when people hold back purchases in anticipation of falling prices. One can calculate what this would mean for a maximally overstretched construction industry. There are quite a few missing demanders in commercial real estate; rental properties are also interesting. The public sector as a demander as well. Economic stimulus programs are okay, but what comes after and besides? The funds are absolutely empty. And whether loose financing over 10-15 years will still be so common for private individuals with little equity and income remains to be seen.

We are building with a general contractor who manufactures the walls in the factory (solid wood). We are at about 2,450 euros/sqm for the house and have a relatively good standard and KfW40 for that. And we are not building in the middle of nowhere but rather in the higher-priced Bavarian-Baden-Württemberg border area.
So, I think there still has to be some room for price adjustments!

Thank you for your comment! I agree too

The direction of prices depends on the ratio of optimists to pessimists. You follow the narrative in which the (paid) prices keep rising, there are no limits, and this time the cycle has no end – the bulls. They dominated for a very long time, and now a black swan has arrived, bringing fear and doubt. So why do PMs keep reporting that prices on the platforms are still rising?
Because the other side, the bears, is coming. Pessimists simply see that the world is heading into the biggest economic crisis in decades. Because international investors don’t build single-family houses. Because rental apartments in the current situation (even before Corona) are no longer really profitable. Because rents will no longer rise. Because companies are no longer hiring people, because everyone is cutting costs. Everyone has to judge for themselves whether 4% - 10% cost / “value increase” is real or rather a bubble.
Much has already been written about the price bubble (inflation).
Deflation, by the way, is when people hold back from buying in anticipation of falling prices. One can imagine what that could mean for a maximally overinflated construction industry. There are quite a few failing demanders in commercial real estate; rental properties are also interesting. The public sector as a demander as well. Economic stimulus programs, okay, but after that and beyond? The coffers are completely empty.
And whether loose financing over 10-15 years will remain so common for private individuals with little equity and income remains to be seen.

I sign this 1:1; see my post #123.

You are welcome to wait for that.

The argument, if not us then who, comes up every 2 weeks in some thread.
By the way, this is not new but has been complained about for 5 years or more.

You just have to consider "when" you want to get something from your house. If waiting 2-3 years and then starting is okay, then go ahead.

Maybe inflation won’t rise either, it didn’t after the financial crisis despite bond buyback programs and low interest rates.
Maybe the masses of money that exist want to go somewhere... and since there are no interest rates, people prefer to continue sponsoring their children or grandchildren in building a house rather than paying custody fees for it.
Maybe all those on short-time work will return to their jobs quite quickly because with all fiscal and monetary policy measures, the recovery is coming faster than expected.

It doesn’t have to happen that way, but waiting can also backfire.

Btw, it may not be luxury, but you are already operating in the upper segment. For example, the garage is not included in the price per square meter.