Why don't construction prices go down?

In Turkey, the high inflation is being combated with a fourth consecutive interest rate hike. The key interest rate rises by 5.0 percentage points to 30.0 percent.

The Turkish central bank has once again significantly increased the key interest rate in view of the high inflation. The key interest rate rises by 5.0 percentage points to 30.0 percent, the central bank announced on Thursday in Ankara after its monetary policy meeting. Economists had on average expected the decision. It was the fourth consecutive interest rate increase. The key interest rate is still below the inflation rate, which had risen to 58.9 percent in August. With the rate hike on Thursday, the central bankers likely also tried to underline their determination in the fight against high inflation. The decision is intended to initiate a process of declining inflation rates and to anchor inflation expectations, according to the central bank’s statement. Inflation rates in July and August had been above expectations. The central bank therefore announced further interest rate increases. The goal is to reach the inflation target of 5 percent again in the medium term.

If I may briefly interrupt the general political discussions with a remark on the actual topic - today, nearly every newspaper carries the major headline that housing prices have collapsed. I wanted to take a closer look at this and followed the link from the Federal Statistical Office to Dashboard Germany, where you not only get the relative change but also the classification within the entire time series.

For people like us, the "Price index for single- and two-family houses by district types" is probably relevant. In all areas, a declining price* can be observed since the 2nd or at the latest the 3rd quarter. Only: At what level? Yes, we have dropped from 190/170% to 170/150%, so hurrahurra, prices are "only" 50-70% higher than seven and a half years ago.

* = What is being evaluated is the price. This means, according to my understanding, NOT that the same house with all the luxury is suddenly that much cheaper, but rather that houses are now being built more reasonably.

Thank you for a contribution to the actual topic. Is the index "Price index for single and two-family houses by district types" really meant to represent the price for new builds or for everything including existing properties?

There is also a view "Construction price indices". There it has always gone up so far. Just maybe a little less steep.

Thank you for a contribution to the actual topic. Is the index "Price index for single- and two-family houses by district types" really meant to refer to the price for new buildings or for everything including existing properties?

Good question! Because currently, unsanitary old buildings are like sour beer on the market; prices are going down, and with that the average price of offered and sold houses. Only: if you want a >2020 underfloor heating–heat pump–photovoltaic new build, it helps you little if the unsanitary post-war shack is now 20% cheaper.

In general, I find it partly great, partly extremely annoying to go through the statistics. Much is very well presented but if you want to know exactly how it came about, to draw the right conclusions for yourself, it quickly ends.

If you want to read further than just the current shock report, then go to "Dashboard Germany," there "Building and Living," then depending on interest further. Under "Price indices for residential properties: indices and rates of change" it is separated into new build and existing properties.

But that doesn't help at all the person who now wants to buy an existing property. It may be 10, 20, or 30% cheaper than two years ago. But he also has to accept 4% instead of 1% interest, which still makes the loan more expensive than at peak prices two years ago.

In new construction, on the other hand, this trend is not visible at all. The new prices will come at the end of the year, and I hardly believe that any construction company will lower prices; at best, there will be a freeze or "nonsensical" additional features included in the standard to suggest a price reduction "But now we have a fireplace included!!"... yeah great, but I don't need that...

Because there is always the price question there too... how should prices go down if energy prices, wages, and material costs do not?

There are, as with every other party, election programs for the federal states, the European elections, or the federal level.

The essential aspects are included there as the party’s program. I am not allowed to link.

But here are 3 arbitrarily selected demands.

The AfD therefore advocates at the federal level for a comprehensive pension reform, which, for example, aims that the self-employed, entrepreneurs, civil servants, and politicians also pay into the pension funds.

We demand that the wired broadband expansion in Bavaria is finally completed nationwide and that fiber optics is preferably used. Mobile network coverage must be ensured in rural areas, especially along railway lines and main traffic routes.

We want to reduce construction costs, simplify Bavarian building law, and reduce the requirements of the Building Energy Act.

And now I’ll simply ask three questions about these three demands:

1. What exactly is supposed to change about the current pension problems if these groups are also supposed to contribute and accordingly acquire entitlements that lead to payouts? For civil servants it’s a zero-sum game; for the self-employed, it will stifle business startups.

2. Wired broadband expansion nationwide? Who is supposed to finance that and above all why should every small town be connected with a technology that is already outdated and cost-intensive today? Better would be for Freistaat to launch its own internet satellites into orbit, à la SpaceX.

3. Bavaria can only influence a part of this at all and often the greed of the developers is the cost driver. In Suhl there are KfW55 new-build apartments for 3,000 euros and in the Bavarian hinterland for 5,000 euros. I don’t believe Polish workers are that much more expensive here.

In summary, pure pub talk slogans to appeal to simple-minded voters and no innovation behind it. You’ll have to explain to me what exactly is supposed to be great about this now.