What can we finance?

Now you could have invested 85k as a lump sum and another 580€ monthly alternatively, and with 1% interest on the capital (taxes probably wouldn’t apply for a married couple at these amounts), I already come to a sum of 167k that you missed out on. So you spent at least 83k for the luxury of owning a home, right?!

If I were to sell the house after 10 years for a value of 30K€, I would have 239K€ in hand. As a tenant with 1% interest, only 167K€. That makes a plus of 72K€ for me.

But that is very speculative. Statistically speaking, the stock market is definitely safer. Only the Germans with their fear of the stock market haven't realized that yet..

I can compare it relatively well with us, since we have built quite close to the standard here in the forum compared to many others.

In 2014, we completed a small house with 125m² living space, a 50m² steel garage, and the outdoor facilities on a 525m² plot. All this for around 300K€.
Equity 85K€
Loan 215K€
If you spread the annual special repayments, we have a monthly rate of 1530€.
Outstanding debt after 10 years 61,000€

If you roughly calculate what the house costs us in 10 years, it would be
Equity 85K€
Installments 183.5K€
Reserves and non-allocable costs (estimated 250€/month) 30K€
=298,500

Against that stands the value of the house at 300K€ minus 61K€ outstanding debt = 239K€

In this residential area, several houses with similar size, age, and features have also been listed for cold rents around 1200€/month online. That makes 144K€ rent over 10 years.

As a tenant, you would have a surplus of 580€ between the rate of 1530 plus 250€ reserves and the cold rent of 1200€.
If you invest this together with the 85K€ equity, after 10 years at 4% return you would have 212K€, at 5% 230K€ and at 6% 250K€.

Assuming that the house is not worth less (which is unlikely given the increase in land prices from 80€ to 200€/m²), we would have had to achieve an after-tax return of 5-6% with the capital.

Rent increases would further improve the result in our favor.
A period of >15 years would also work in favor of ownership due to the elimination of the installment.

For us, it definitely paid off assuming that, as tenants, we would also have decided on a house.
This may look very different in other regions, with different repayment rates or at different points in time.

The value of a house actually never rises, it only ever falls (depreciation)... if anything rises, it’s the land. Whether land prices will continue to rise as sharply as before is pure speculation. If interest rates are significantly higher again at some point (and they actually must be)... what do you think will happen then? The circle of people who can finance 500...600k (and that’s the minimum, because construction prices certainly won’t fall, that has never happened) at a few percent interest will shrink significantly. On top of that, people with relatively high incomes prefer to build themselves rather than buy existing property. So who is supposed to buy all these houses then? Additionally, there is the massively aging population who wants to move out of houses (because they are too big). All in all, not so rosy... small houses in prime locations might be better... larger houses in not-so-great locations will almost certainly not see any appreciation. We have an AAA location (big city + large lake right outside the door) and still I am sure that currently no one would pay the already invested 1.2 million for our house. My maximum guess is 900k... and even then the buyer pool here in the East is probably extremely small. If anything, this "layer" builds themselves. I just hope never to have to sell, even though I’d really like to build again.