Why don't construction prices go down?

I read this information somewhere recently from a banker. However, it is not far-fetched.

I can’t say who wrote it to me anymore, but it is indeed true.

OK – but not at about 400 banks in Germany. They calculate according to our specifications...

Why should I doubt that. Electricity, heating costs, insurance, property tax, garbage, water, wastewater, telecommunications, reserves for repairs. Yes, that adds up enormously.

Why? Because you can think. Except for reserves, these are all costs that each of us must bear. Regardless of whether tenant or owner. Regardless of whether small or large property. These costs depend on the place of residence, family size, property size, etc. You can calculate what this costs yourself. For my house it is about 180-200€ per month. Only the reserves for maintenance are added by the owner. There you have to see how you calculate. Peters’ formula for maintenance reserves per sqm/year: (construction costs per sqm times 1.5) divided by 80 years ==> with 400,000 euros construction costs for 140 sqm this would be 54€ per sqm living space ==> 630€ per month 2.BV: 7.10€/sqm per year ==> 83€ per month for pure maintenance According to the Association of Private Builders: 1€ per sqm per month ==> 140€ per month as maintenance reserve

However, Peters’ formula is highly disputed, as it essentially assumes a new build of the property within the life cycle. That is unrealistic. So let’s stick, for example, to the Association of Private Builders. And with that (and also the calculation from the 2.BV) you are very far from "read somewhere from a banker".

Only one is, even though the Bild newspaper has been running a fear campaign against it for years, precisely not an option, namely the property tax. That it MUST be overall revenue-neutral, the Federal Constitutional Court made very clear when they demanded the new regulation of the tax. So if you are going to run a fear campaign, then please not one that collapses in seconds for lack of basis.

I don't even know how naive one can be. I won't write anything more about that.

Except for reserves, these are all costs that each of us has to bear. Regardless of whether tenant or owner. Regardless of whether small or large property. These costs depend on the place of residence, family size, property size, etc.

A brief counterexample. Building insurance for a 10-family residential building costs me about 600 euros per year. Which I, of course, pass on to the tenants. So the tenant pays 60 euros per year in building insurance. For my house where my family lives alone, I also pay 600 euros and pay it myself.

Residential building insurance for a 10-family apartment building costs me about 600 euros per year.

The 10-family house with 600 euros insurance per year is probably more like a 10-single house.

The building insurance for the rental building I live in and for which I also do the accounting amounts to around 1100 euros/year for 350 sqm of living space (2022 ... in 2013 it was just under 650 euros). That makes 3.11 euros/sqm per year and thus 0.26 euros/sqm per month.

Has also increased a bit, but still quite affordable. I have had it for 15 years as well. However, I have 500 sqm of living space. It was only meant as an example anyway. I would have to check the exact insurance premium now. It could be up to 900 euros by now, as I said, I don't know the details. The new offer for my residential building insurance with an insured value of 500,000 with photovoltaics, outbuildings, and natural hazards now amounts to roughly 580 euros per year. But only because of the adjustment of a contract that has existed for 20 years. Photovoltaics are all included, also the storage in case lightning strikes. Or fire, explosion, etc.

I won’t write anything more about that.

That’s definitely better, because a simple Google search (links are unfortunately yuck here) for "Grundsteuer Bundesverfassungsgericht" or "Grundsteuer aufkommensneutral" immediately delivers the respective rulings which quickly pulverize all the fear campaigns. Just by the way, in case facts even matter: the property tax is a municipal tax, just like the trade tax. If a municipality wants a bit more money, it can quite easily adjust the trade tax multiplier. Sure, companies can relocate – private individuals can too. If a municipality adjusts the trade tax multiplier, no one makes a fuss about it. But if someone currently adjusts the property tax multiplier, immediately Björn, Alice, and Hubertus show up to profile themselves as saviors of the disinherited. And by the way, there are little details like Federal Constitutional Court rulings, which inevitably don’t appear in the fear campaigns of the self-proclaimed property defenders.

Again: There are a thousand ways to raise taxes (how about a sparkling wine tax again?) but why the fear campaign by Bild specifically chose the property tax reform that is explicitly a) revenue-neutral and b) fairness-oriented, one must have a deep interest in the baseless unsettling of the population.

how about a sparkling wine tax again?

Why again? It already exists. It's just called sparkling wine tax. It didn't exist in the GDR but has otherwise been in place continuously since 1902. It was only briefly set to 0 from 1933 to 1937.