Start a construction project, buy only the land or wait?

Perhaps to abstract it once more: It's less about what is financially feasible at all, although budget limits are of course set there, but about the sensible approach. I find it difficult to prepare financing for the entire project under time pressure (land) when the house-side costs can hardly be estimated reliably. Hence the idea to possibly secure the land first. That would take the time pressure off, and the "big" financing would then concern the house project.

First the conversation today with the general contractor – then you have a (lower) financial framework. If that is still achievable for you, you can go ahead; you are well prepared. If it is already completely out of the question now, it would also be okay to pull the emergency brake and look for a Plan B in the mentioned 5 years that provides every child with a suitable room. The equity capital is still available.

Otherwise, the middle way – buy the land with equity capital if possible, possibly finance a part variably, and then calmly carry out the planning and see what comes up in the next few months. Everything is just beginning – in a few weeks the pallet production will probably come to an end because the special nails can only be sourced from Russia. So everything will have some impact on a starting project. A lot has already happened with the interest rate; maybe it will also move sideways there so that your pressure does not increase too much.

No, of course not - prices can never fall, interest rates never rise, and thanks to TINA prices rise forever. History alone shows that, it’s been exactly that way for 500 years.

Interest rates are still cheap in the long-term comparison. There were times with over 10% interest rates and even then prices rose. The only time people got less money for their houses were the junk properties in the East. But the properties were never worth the money and therefore did not fall in value but were sold too expensively to gullible buyers. The possibilities for single-family homes are politically or space-wise limited and there will always be demand for them. You don’t really believe that the refugees from Ukraine will all return. Rather, more will come from the neighboring countries, which are now also getting scared, or those who are already here as temporary workers and are now bringing their families over.

(3) Waive the land, since at the moment a project of this scale up to just under a million is economically possible, but becoming increasingly difficult. This also means in reverse that the topic of building is off the table, as there will be no more plots of land in our desired area for the foreseeable future.

Are you so spatially limited that truly no other houses or building plots are possible. That would mean a village or a very small district.

Interest rates are still cheap in the long-term comparison. There were times with over 10% interest rates and even then prices rose. The only time when people got less money for their houses were the junk properties in the East. But the properties were never worth the money and therefore did not decrease in value but were sold too expensively to gullible people. The opportunities for single-family homes are politically or spatially limited and there will always be demand for them. You really don't believe that all refugees from Ukraine will return. Rather, more will come from neighboring countries, who are now also afraid, or who are already there as temporary workers and are now bringing their families over

Always this argument "interest rates used to be at 10%." Yes, fine, but in the past, construction costs or property prices on the one hand and incomes on the other never diverged so massively within 3 years as is the case now. Do you believe that anyone, except the top ten thousand, can afford property at the current prices with 8% interest rates? I don't see it ...

Conclusion: In your situation, I would complete the land purchase under the given circumstances and open a new thread here (linked) where the conditions of the plot (and also the one planned) and the house design are shown. Then we can figure out together where the construction project has potential for cuts or downgrades to ease the financing.

Thanks, that’s the direction I’m leaning towards. I will actually finance part with external funds since my return on equity is significantly higher than the current debt interest rates. At the same time, some equity remains for the house itself. My advisor gave me the tip not to go all in on the land, even if you could.

Are you so geographically restricted that no other houses or building plots are really possible? That means a village or a very small district.

Actually restricted to a single district, yes. Either build here or not at all.

Thanks to everyone for the tips. Please don’t let the thread drift into fundamental discussions about bubbles, interest rates, and immigration. That would be a shame, because the basic considerations and objections are really good. It helps to think from all sides.

Do you think that with 8% interest rates anyone, apart from the top ten thousand, can still afford property at the current prices?

Yes, as long as houses are built modestly again. 120 sqm is enough for the family. But this discussion has often been held here, and most of the time it has to be the house sizes, etc...