Why don't construction prices go down?

So here, apartment prices are indeed going down – of course from an extremely high level and only for older apartments. For new occupancy, prices remain at 12k for good locations, while in average locations, a drop from 11k to 10k is already considered a price crash.

So here apartment prices are indeed going down – of course from an extreme level and only for older apartments. For new occupancy, prices remain at 12k for prime locations; for average locations, a drop from 11k to 10k is already considered a price crash.

Well, 11k to 10k is already 9%. It's similar in our area (Northern Bavaria). Existing buildings have definitely dropped in price and listings remain for longer periods. Prices for new buildings remain high. But doesn't that come full circle? If construction costs remain high, new buildings can't really fall significantly in price. You can at most reduce the profit margin, and eventually it will disappear.
Example near us a few hundred meters away: currently row houses are being built. Some are sold, some are not. If the remaining houses don't sell at the asking price, the price will probably drop. However, not endlessly. You can reduce the profit, but eventually it gets tough. Existing properties are more flexible in that regard if you can't sell at the asking price.

That's the trick of the story. Surely, the general contractors and developers earned double-digit margins during the boom phase. But that also means that with a complete disappearance of the margin, only about 10, 15%, maybe 20% less in price is possible.
You don't have to go through all the hassle for no profit, so maybe 10%, over a short period also 15%, is achievable.

And what one must not forget:
The prices for raw materials like wood, cement, sand, energy are not determined in Germany; they are formed on the world market...

Even though it is 9% less than before, 10k per square meter is still a lot of money - and that explicitly for average locations.

Currently, I slowly get the feeling that with the same performance it no longer gets cheaper but only less is included. Then, reluctantly, a size smaller is chosen.

We are still far from the prices of apartments in other cities around the world. As soon as interest rates fall because inflation eases, the magic starts all over again. There is even more room to grow than some believe.

We are still far from what apartments in other cities around the world are asking for. As soon as interest rates fall because inflation weakens, the magic starts all over again. There is even more room to grow than many believe.

That's what I've been saying all along. Unfortunately, links are not allowed. Yesterday, an article in the MZ Regensburg. For the first time, the price of 12,000 EUR per sqm was exceeded for a monument-listed property. Of course, not representative. But quite astonishing. In special locations, it remains stable.