ᐅ Is the real estate market increasingly forcing families to build their own homes?
Created on: 6 Apr 2019 11:35
T
Thierse
Actually, we would prefer to avoid building. Unfortunately, existing properties within a 20 km (12 miles) radius have become quite expensive, and affordable rental houses with small gardens are simply scarce.
Until now, we have been living in an old rental apartment without a garden. We would like to change that, but there is a lack of options. The listings on various platforms are overcrowded with families looking for affordable housing.
Who is familiar with this situation, and how do you deal with it?
Until now, we have been living in an old rental apartment without a garden. We would like to change that, but there is a lack of options. The listings on various platforms are overcrowded with families looking for affordable housing.
Who is familiar with this situation, and how do you deal with it?
wurmwichtel schrieb:
For purchasing property, an income significantly above the median is still required. Otherwise, it simply won’t work.
If you check where the median is, it becomes clear how many people are simply unable to afford their own home. This affects more than 65% of all households, so it’s hardly worth mentioning. We have had this discussion several times. The middle class ranges over a spectrum and is not represented solely by the median.
@Lumpi_LE I’m not referring to a chain but a single-person company.
Lumpi_LE schrieb:
Well, from what I’ve heard. Over the weekend, there was a fairly large article in the daily paper: A hair salon chain had to close 3 branches last year because they couldn’t find staff, even though they offered €2300 gross for a 40-hour week plus €20-30 tips per day – that’s about €2000 net. I know quite a few highly qualified people who don’t earn that much... If a hairdresser earns €2000 net including tips, they belong to the middle class, even above the median income for single individuals. All good.
Lumpi_LE schrieb:
Well, from what I’ve heard. Over the weekend, there was a pretty big article in the daily newspaper: A hair salon chain had to close 3 branches last year because they couldn’t find staff, even though they offer €2300 gross for a 40-hour week plus €20–30 tips per day—which comes to about €2000 net. I know quite a few highly qualified people who don’t earn that much... Well, in our town, the hairdresser once put up posters explaining that they treat their employees well and already pay minimum wage several months before it became legally required. They asked for understanding regarding the price increase necessary for these social reasons.
It’s all a matter of perspective.
For many, the standard of living is simply too high. There needs to be impressive photos from Asia or elsewhere 2-3 times a year. Then there are cost drivers like technology: internet, smartphones, computers, tablets, consoles, and so on. Many people between 20 and 35 have all of these or at least a few. On top of that, cars have become more expensive due to technology, and many choose to lease a one-year-old car for 200-400€ per month instead of buying a decent car for 6,000€-7,000€ that would last 10 years.
Then there are gap years abroad and years off for recuperation.
This wasn’t as extreme in the past. Then there is the house itself. Energy standards that push up prices, and so on.
I see consumer behavior as more of a problem than prices. Of course, luck and connections probably play a role, but discipline too. I wasted a lot of money myself right after training. Bought a new car immediately, and so forth. You only live once. But when it came to buying a home, compromises had to be made.
If children are planned, then you have to save again beforehand and live off those savings for 1-2 years until your partner goes back to full-time work.
If interest rates ever rise again, prices will likely fall, but ultimately people will still be paying between 25% and 40% of their income for their mortgage.
Many also say that investing money elsewhere makes more sense… that may be true, but how many people really understand the stock market or similar investments? I, for example, do not at all. I also view our house as an investment... If I pay 200-400€ less rent, I wouldn’t invest that money elsewhere to grow it—I’d probably buy a nicer car or book a more expensive vacation. As things stand now, “I just save less,” but I do save.
Then there are gap years abroad and years off for recuperation.
This wasn’t as extreme in the past. Then there is the house itself. Energy standards that push up prices, and so on.
I see consumer behavior as more of a problem than prices. Of course, luck and connections probably play a role, but discipline too. I wasted a lot of money myself right after training. Bought a new car immediately, and so forth. You only live once. But when it came to buying a home, compromises had to be made.
If children are planned, then you have to save again beforehand and live off those savings for 1-2 years until your partner goes back to full-time work.
If interest rates ever rise again, prices will likely fall, but ultimately people will still be paying between 25% and 40% of their income for their mortgage.
Many also say that investing money elsewhere makes more sense… that may be true, but how many people really understand the stock market or similar investments? I, for example, do not at all. I also view our house as an investment... If I pay 200-400€ less rent, I wouldn’t invest that money elsewhere to grow it—I’d probably buy a nicer car or book a more expensive vacation. As things stand now, “I just save less,” but I do save.
There should be a paradigm shift in Germany towards "ownership is good, everyone should have it," similar to Denmark, Sweden, the Netherlands, or even the UK and Ireland.
How can this be achieved? Eliminate the property transfer tax on owner-occupied homes.
In Denmark, you can deduct mortgage interest on secured loans from your income tax. That really helps. People paying off a house effectively end up paying hardly any taxes.
Municipalities designate preferred land zones, and everyone does this. Why? Because attracting a financially stable new resident benefits the city clerk’s office more per new citizen than it does here. Copenhagen prefers to fund itself through relatively high indirect taxes such as VAT, sugar tax, alcohol tax, etc.
However, speculation and land hoarding are strictly prevented. Those who do not build lose the land again. If someone wants a second home by the sea, they must build in a designated summer house area; if they try to do this in a regular single-family home neighborhood, they will be expropriated. The rules are quite strict, and they enforce them consistently.
Construction is also simpler. Not worse insulated or anything like that, but generally smaller and much more industrialized. A standard Danish house comes finished, with the kitchen installed and painted, ready to move in. It's less individual, but that's just how it is. – What works to their advantage: they are much less expensive per square kilometer (sq km). This helps a lot to keep prices under control. Except for Copenhagen and Aarhus, there are almost no large metropolitan areas. Karsten
How can this be achieved? Eliminate the property transfer tax on owner-occupied homes.
In Denmark, you can deduct mortgage interest on secured loans from your income tax. That really helps. People paying off a house effectively end up paying hardly any taxes.
Municipalities designate preferred land zones, and everyone does this. Why? Because attracting a financially stable new resident benefits the city clerk’s office more per new citizen than it does here. Copenhagen prefers to fund itself through relatively high indirect taxes such as VAT, sugar tax, alcohol tax, etc.
However, speculation and land hoarding are strictly prevented. Those who do not build lose the land again. If someone wants a second home by the sea, they must build in a designated summer house area; if they try to do this in a regular single-family home neighborhood, they will be expropriated. The rules are quite strict, and they enforce them consistently.
Construction is also simpler. Not worse insulated or anything like that, but generally smaller and much more industrialized. A standard Danish house comes finished, with the kitchen installed and painted, ready to move in. It's less individual, but that's just how it is. – What works to their advantage: they are much less expensive per square kilometer (sq km). This helps a lot to keep prices under control. Except for Copenhagen and Aarhus, there are almost no large metropolitan areas. Karsten
"...Many also say that investing money elsewhere is more sensible.. Maybe so, but how many really understand the stock market or similar? For example, I don't at all...."
It’s really not rocket science. Monthly ETF savings plans on a broadly diversified index and/or dividend funds, and that’s it. This way, you ride out all the ups and downs of the market and achieve a long-term return of 6–8 percent per year. Without stress or hassle.
It’s really not rocket science. Monthly ETF savings plans on a broadly diversified index and/or dividend funds, and that’s it. This way, you ride out all the ups and downs of the market and achieve a long-term return of 6–8 percent per year. Without stress or hassle.
Similar topics