Hello everyone,
I have been visiting this forum as a guest for some time now and have reached the point where I would like to gather various opinions from other members.
Last July, we purchased a 400sqm (4,300 sq ft) plot of land at 750€ per sqm (750€ per 11 sq ft) (yes, I know, it’s small). We financed this plot with an interest rate of 0.9%. Since a two-family house was planned (or was supposed to be built) on this small plot, the planning process took a while due to several necessary appointments with the local authorities.
Now that the plan is finished, we are facing the current chaos in the construction industry.
Construction costs are skyrocketing, interest rates seem to rise daily, and inflation is high. Had I known what this year would bring, well, hindsight is 20/20! But no use dwelling on “what ifs.”
So here we are: the land is financed under relatively good conditions, but the situation in the building industry is telling me personally, “do everything you can, but just don’t start building now.” Beyond the soaring prices, I am especially deterred by material shortages that could lead to unpredictable delays. I don’t want to give up my apartment because I plan to have the house ready to move into within three months, only to end up without a roof over my head.
Some might say, “Well, great, you financed the land under good conditions—perfect during inflation!” but I’m a bit skeptical about that. For one thing, the land at 750€ per sqm was not exactly a bargain. Currently, due to scarcity of plots, prices are being pushed up to around 1000€ per sqm (1000€ per 11 sq ft) in some cases, but I attribute this rather to a small “bubble” created by people rushing to secure still decent conditions by buying anything available.
Moreover, from next year onward, it will reportedly become much harder for the average person to finance property as new regulations are coming into effect. Coupled with already rising interest rates, I fear the real estate market might at least soften somewhat, which could also affect land value assessments. This brings me to my question:
I know this is partly speculation, but I would like to hear what others think.
How do you see this? Do you believe land value assessments will be spared from any “drops”?
What would you do in my position? Keep the land, pay it off, and just watch how things develop over the next few years, maybe waiting for the right moment to start building?
If you ask me, I think it would be wise to sell the plot as soon as possible while there are still enough buyers willing to build. I expect the plot’s value to decrease starting next year due to new regulations and rising interest rates. The plot is only suitable for one family, and financing will become significantly more difficult for them then.
I’m looking forward to an active discussion and thank you in advance for your attention!
Best regards
I have been visiting this forum as a guest for some time now and have reached the point where I would like to gather various opinions from other members.
Last July, we purchased a 400sqm (4,300 sq ft) plot of land at 750€ per sqm (750€ per 11 sq ft) (yes, I know, it’s small). We financed this plot with an interest rate of 0.9%. Since a two-family house was planned (or was supposed to be built) on this small plot, the planning process took a while due to several necessary appointments with the local authorities.
Now that the plan is finished, we are facing the current chaos in the construction industry.
Construction costs are skyrocketing, interest rates seem to rise daily, and inflation is high. Had I known what this year would bring, well, hindsight is 20/20! But no use dwelling on “what ifs.”
So here we are: the land is financed under relatively good conditions, but the situation in the building industry is telling me personally, “do everything you can, but just don’t start building now.” Beyond the soaring prices, I am especially deterred by material shortages that could lead to unpredictable delays. I don’t want to give up my apartment because I plan to have the house ready to move into within three months, only to end up without a roof over my head.
Some might say, “Well, great, you financed the land under good conditions—perfect during inflation!” but I’m a bit skeptical about that. For one thing, the land at 750€ per sqm was not exactly a bargain. Currently, due to scarcity of plots, prices are being pushed up to around 1000€ per sqm (1000€ per 11 sq ft) in some cases, but I attribute this rather to a small “bubble” created by people rushing to secure still decent conditions by buying anything available.
Moreover, from next year onward, it will reportedly become much harder for the average person to finance property as new regulations are coming into effect. Coupled with already rising interest rates, I fear the real estate market might at least soften somewhat, which could also affect land value assessments. This brings me to my question:
I know this is partly speculation, but I would like to hear what others think.
How do you see this? Do you believe land value assessments will be spared from any “drops”?
What would you do in my position? Keep the land, pay it off, and just watch how things develop over the next few years, maybe waiting for the right moment to start building?
If you ask me, I think it would be wise to sell the plot as soon as possible while there are still enough buyers willing to build. I expect the plot’s value to decrease starting next year due to new regulations and rising interest rates. The plot is only suitable for one family, and financing will become significantly more difficult for them then.
I’m looking forward to an active discussion and thank you in advance for your attention!
Best regards
M
Mikehausbau7 Apr 2022 22:34Hello,
I am currently in the planning stage before submitting the building permit / planning permission. Unfortunately, despite a fixed-price guarantee, I received a letter stating that the construction company wants to adjust the price and construction timeline. It is really difficult at the moment, and I doubt things will get better. I feel that waiting around doesn’t make much sense. I believe land plots will always sell well, even in the future, as there are too few of them. Instead of 50 potential buyers, you might have 25. You only need one, and you will find one. There are always couples who have inherited an apartment, for example.
Only they probably can afford something right now.
I am currently in the planning stage before submitting the building permit / planning permission. Unfortunately, despite a fixed-price guarantee, I received a letter stating that the construction company wants to adjust the price and construction timeline. It is really difficult at the moment, and I doubt things will get better. I feel that waiting around doesn’t make much sense. I believe land plots will always sell well, even in the future, as there are too few of them. Instead of 50 potential buyers, you might have 25. You only need one, and you will find one. There are always couples who have inherited an apartment, for example.
Only they probably can afford something right now.
B
Benutzer2007 Apr 2022 22:41Renat11 schrieb:
Starting next year, it’s going to be much harder for the average person to finance a property; I read something about new regulations and so on. No.
Renat11 schrieb:
What do you think? Do you believe the standard land value for plots will remain unaffected by possible “crashes”? I don’t expect any crashes at all. Maybe in the absolute boom regions prices will drop slightly (as we have already seen for some time in Düsseldorf, for example), but that’s not a crash.
Anyway, if there were crashes, of course land values would also decline.
Renat11 schrieb:
What would you do in my position? Keep the plot, pay it off, and just watch how things develop over the next few years, maybe wait for the right moment to build? You will never catch the right moment.
Renat11 schrieb:
If you ask me, I think it would make sense to sell the plot as soon as possible, since there are still enough people wanting to build now. I expect the plot’s value to drop from next year due to new regulations and rising interest rates. The plot is only interesting for a family, and from next year it will be significantly harder for them. Since those new regulations don’t exist, you’re mistaken. The question is whether you want to own property or not. I do not see any price decline in plots—what is readily available in Germany is liquidity. And liquidity always tends to move into tangible assets. That was the case in recent years and will continue to be so.
If you want to own a home, then build. If you’re really not interested, then sell the plot, pay your taxes on the profit, and enjoy it. However, if you decide in half a year that you want to build again, it will be significantly more expensive in terms of financing than when you financed your plot. You can already double your interest rate now.
Are you still planning to build? Is the plot located in a favorable area for you? Are you under any building obligation? (This is often the case in new development areas.) Do you feel comfortable with your current living situation, or is it foreseeable that you will need something different soon? (Because of a growing family, difficult neighbors, or other reasons.)
I also find the situation difficult. There is a new development area nearby that we had been considering... but by now, I almost hope the sale is delayed for quite some time. If the prices were at least somewhat predictable (even if high), that would be one thing, but right now everything feels uncertain.
My initial idea would probably still be to try and build, to reassess my financial framework in the current situation, and see if building is still possible. Probably in a scaled-back form compared to the original plan. But there are many ifs and buts, depending on how your personal situation looks at the moment.
I also find the situation difficult. There is a new development area nearby that we had been considering... but by now, I almost hope the sale is delayed for quite some time. If the prices were at least somewhat predictable (even if high), that would be one thing, but right now everything feels uncertain.
My initial idea would probably still be to try and build, to reassess my financial framework in the current situation, and see if building is still possible. Probably in a scaled-back form compared to the original plan. But there are many ifs and buts, depending on how your personal situation looks at the moment.
Benutzer200 schrieb:
Since the new regulations don't exist yet, you are on the wrong track.There was an article on Zeit today suggesting that the Bundesbank is considering imposing higher capital requirements or something similar. But whether that will actually happen is still very uncertain.K
k-man20217 Apr 2022 23:15I wouldn’t give up a plot of land anymore, especially if it is financed cheaply, the financing doesn’t burden you, or you need the money for something else. We bought a plot at the end of last year, have just discussed the preliminary design with the architect, and will go ahead with our build. If it takes longer, then so be it; if it becomes more expensive, we will have to save somewhere or find another solution.