Why don't construction prices go down?

Prices are already falling. The ID 3 as a new vehicle in Germany is now available for 33,900 euros. From 01.09.2023, the subsidy has also been significantly reduced. And suddenly prices are crashing. I did not see this offer in July.

Which, of course, is also part of an answer to my previous question. Prices in Germany are falling rather slowly, while they are rising in China. And this will also affect construction prices.

Price lists remain unchanged, but there are now sales aids and special discounts. Suppliers apparently think that demand will pick up again and they can then push through the high prices.

The root cause is the high tax burden and low net wages. If nearly 50 percent of income goes to the state, then the tax rate is simply too high. Of course, people today could finance houses, even at today’s prices and interest rates. But the problem is on the income side. Not even gross, but net.

We still have record inflation. Does anyone think about adjusting tax allowances to this inflation? No. Although citizen's income is increased by 12 percent, I have to pay taxes on every euro that exceeds an income of 904 euros per month.

Why aren’t 2000 or even 2500 euros simply tax-free? That would help low and middle incomes.

Anyone building or buying a house today will have to reckon with costs including financing and incidental expenses between 3500 - 4000 euros per month. To have a reasonably decent life, a family income of maybe 7000 euros should now be considered sufficient. With 5000 euros, you can no longer get very far.

Car, vacation, hobbies also take quite a bit. And that noticeably reduces the circle of potential home builders. And there will also be quite a few who do not want to tie such a financial burden to their leg right now.

The problem is only on the income side. Not even gross, but rather net.

NO! Unless we are talking about the low-wage sector, the problem for the homeowner is not on the income side, but on the expense side.

Anyone building or buying a house today will have to expect costs including financing and incidental costs between 3,500 - 4,000 euros per month. To have a somewhat reasonable life, a family income of maybe 7,000 euros should now be considered sufficient. With 5,000 euros you won’t get very far anymore.

LOL. What costs besides financing costs come additionally to someone who builds or buys? The incidental costs will be at a comparable or even lower level than before renting (especially due to lower heating costs).
100,000€ loan currently costs about 500€ p.m. including repayment (2%). So you are calculating with at least 600,000€ debt? So an average property of 750,000€-800,000€? Wow. Far from real life.
Anyone with 5,000€ net and 75,000€ equity can comfortably afford a nice property of 450,000€ today. If it gets more expensive, it gets tighter.

Car, vacation, hobbies also all take quite a bit. And that already noticeably reduces the circle of possible homebuyers.

With that, you have named the main reason (see above) why "one" can no longer build/buy today. "One" does not want to sacrifice their lifestyle for a dream property or "one" does not want to give up. Money used to be almost free from the bank. Back then "one" did not have to give up and has since forgotten how...

I want to see the calculation in which the ancillary costs of a rental apartment in a multi-family house are lower than those of a detached single-family house with a garden. Even if the insulation is significantly better, you have 4 exterior walls, the roof, and the floor slab or the basement. In a multi-family house, you either have the basement or the roof and rarely more than 2 exterior walls. The rest is physics and a bit of calculation.

Such a calculation only works if the homeowner forgoes any reserves for maintenance and lets the place fall into disrepair.

By the way, the 5,000 net is correct. Building a house is no longer feasible with that, unless you finance it over 50 years. For under 2,000 EUR installment at 4% interest, you can't get a house anymore, not even with a lot of personal effort.

"One" does not want to sacrifice their lifestyle for a dream property or "one" does not want to give up anything. Money was almost free to get from the bank in the past. At that time "one" did not have to give up anything and has forgotten how to...

Where I agree is that until a few years ago it was not necessary (or well hidden) that you can only spend money once and that means for consumption OR a property. It did not matter, the money comes from the bank, so let's go. One didn’t have to give up anything – at least not for the first few years.

What I currently see, however, is a (forced) more conscious decision whether to really put a lot of money into a property – because you suddenly realize that you have to severely restrict yourself in other areas. That is simply called setting priorities, and in Italy they have long practiced this: there, you put as little money as possible into housing and spend the rest on consumption. As long as you do this consciously and stand by it, I find it absolutely easy – I only find it bad when people then complain that "others have it better." No, they simply set different priorities at some point.

I want to see the calculation where the additional costs of a rental apartment in a multi-family house are lower than those of a detached single-family house with a garden. Even if the insulation is significantly better, you have 4 exterior walls, the roof, and the floor slab or basement. In a multi-family house, you either have the basement or the roof and rarely more than 2 exterior walls. The rest is physics and a bit of math.

Yep. Just do the math and be amazed ;-) You’ll be surprised at what you pay in heating costs today for an old 100 sqm apartment. The 125 sqm house is often 75-100€ cheaper per month. You can easily cover somewhat higher property taxes and sewage charges from that (possibly also insurance). Electricity, water consumption, and waste are generally constant.

By the way, the 5,000 net is correct. Building a house is no longer possible with that, unless you finance over 50 years.

That will be difficult. Even with 1% repayment, at 4% interest you’re paid off after about 40 years. Net income is one thing. Equity, personal contribution, and desired property are another. There is someone on this forum who always recommends Town & Country. The Flair 110 costs only €240,000 plus land and incidental costs. Why can’t you afford that with 5,000€ net? It only doesn’t work if you have no equity at all, are looking for land in Munich, and have 1,000 special requests. Of course, it’s possible – you just have to want it (yes, it doesn’t work in Munich…).

You don’t get a house anymore with less than 2,000 EUR monthly payment at 4% interest, even with lots of personal contribution.

And you can’t live on 5,000€ net or the remaining 3,000€ after the payment? Tell that to the average family in Germany, who have to live on about 3.8xx€ per month BEFORE rent.

the statement "the same car costs half as much abroad!"

Exactly, there was once a report in which they compared the Jetta D and the USA. In the States, many things were implemented more cheaply. You save wherever you can because Americans have no understanding of automotive quality. I also do not understand why the principle of supply and demand is always called into question. The prices that are paid are always the ones asked for. If no German bought a Golf anymore, prices would also drop.