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
Wait and take it easy as long as the plot doesn’t hurt your finances. Who knows what a year will bring? Things change. The land doesn’t lose value. And I don’t find it small either, especially for expensive areas where you’re glad not to have to buy 700 m² (8,400 sq ft). The size is manageable, the price is manageable, the risk is manageable 🙂
Okay, so it seems like everyone agrees on one thing: keep the plot of land.
I didn’t expect it to be this clear-cut.
I’ve taken some time to think everything over calmly, considering the points you all mentioned, and it has to be said that selling might actually be quite “foolish.”
You have no idea how strong that desire for our own home is. I can no longer tolerate the stomping, shouting, and arguing from the neighbors, and the space is definitely not enough — especially now that the little one is here. Aside from that, not having a garage is a huge problem for me. We have a serious marten problem around here. These little pests regularly damage parts of our car, which is why I personally won’t buy an expensive car anymore.
I mean, the problem with the neighbors will never really be completely solved. We will have houses and therefore neighbors around us as well, so there’s always a risk of potential conflicts. But when I close my front door, it’s closed, and I have peace and quiet.
You might laugh, and this may sound a bit sentimental, but I was really happy for you/you all when I read that. You are very happy, and you can tell—congratulations!
I think that’s exactly how we would feel in our own home.
Well, I have a meeting with the bank next week, so I’m curious to see what comes of it. I’ll keep you updated!
I didn’t expect it to be this clear-cut.
I’ve taken some time to think everything over calmly, considering the points you all mentioned, and it has to be said that selling might actually be quite “foolish.”
TmMike_2 schrieb:
@Renat11
The main deciding factor should be how strong the dream of living in your ‘own four walls’ really is.
Are you willing to invest 2-3 years for it?
You have no idea how strong that desire for our own home is. I can no longer tolerate the stomping, shouting, and arguing from the neighbors, and the space is definitely not enough — especially now that the little one is here. Aside from that, not having a garage is a huge problem for me. We have a serious marten problem around here. These little pests regularly damage parts of our car, which is why I personally won’t buy an expensive car anymore.
I mean, the problem with the neighbors will never really be completely solved. We will have houses and therefore neighbors around us as well, so there’s always a risk of potential conflicts. But when I close my front door, it’s closed, and I have peace and quiet.
TmMike_2 schrieb:
Just to give an example—and everyone needs to be aware of this—I’m not trying to brag or justify my decisions here.
We built a house that is above average in size, structurally quite complex, and from a return on investment (cost/benefit) perspective, actually not a great deal, with a lot of, and I mean a lot of, non-German-speaking foreign laborers involved (thank you, Google Translate). Others might call this a labor of love.
- In two years, we saved around 200-250k net (compared to a turnkey architect-designed build at €1300 vs. €2200-2400/m2).
- But I also spent at least 4 hours every day on site for two years, including Saturdays until 4 p.m.
- Now, we are the happiest people on the planet, and this project has brought my wife and me closer together than anything else in our marriage.
However, if you don’t pull together, can’t persevere through tough times, or aren’t extreme optimists, such a project can also bring irreversible, serious risks.
Everyone needs to be aware of this.
Looking back, there’s only one thing to say: without ambition and unconditional commitment, we’d still be where we were five years ago.
- Only now with kids, pets, and no space in the city, stuck.
For me, building a house for myself and my family was the biggest achievement. This might be an extreme example, but there is always a middle ground.
You might laugh, and this may sound a bit sentimental, but I was really happy for you/you all when I read that. You are very happy, and you can tell—congratulations!
I think that’s exactly how we would feel in our own home.
Well, I have a meeting with the bank next week, so I’m curious to see what comes of it. I’ll keep you updated!
ypg schrieb:
The property does not lose value.I wouldn't necessarily bet on that. If interest rates continue to rise and building materials also increase in price, then the official land value is the only variable the market has. Maybe someday it will really shift to a buyer’s market.
W
WilderSueden10 Apr 2022 10:40rick2018 schrieb:
In good locations, the land certainly won’t lose value…And that is exactly the critical point. The good locations today are not necessarily the good locations in 20 years. Entire regions can decline drastically due to structural economic changes. In the past, it was the Ruhr area; in the near future, it might be one of the automotive regions.As some of you already know from my earlier posts about funding requests... we are currently in the same situation as many of you. We have waited almost six years for the promised new development area to finally become available. Unfortunately, the local council delayed the process by about three years, which has turned out to be a real financial nightmare for us. But that’s just how it is now.
By some luck, we managed to secure a plot of land without utilities connected yet. The utility connections are scheduled to start in a month, and we have already paid 300€/m² (around $28/sq ft). An additional approximately 240€/m² (about $22/sq ft) will be added for the utility connections.
With the repeatedly mentioned rising costs and interest rates (I’m already dreading the final loan arrangement), the whole project has now reached a price of 1.2 million euros. We are currently cutting back on many of our planned features. We will probably also forgo the KFW funding since the €18,000 benefit doesn’t make a significant difference financially.
However, we will definitely keep the land. We have three kids (4, 5, and 7 years old) whose needs exceed our current living situation (only one child’s bedroom and no office space). So building is a must. Renting or buying in this area is simply not an option because the market is completely dry.
If I were in your position, I would definitely keep the plot and build on it.
Best regards
By some luck, we managed to secure a plot of land without utilities connected yet. The utility connections are scheduled to start in a month, and we have already paid 300€/m² (around $28/sq ft). An additional approximately 240€/m² (about $22/sq ft) will be added for the utility connections.
With the repeatedly mentioned rising costs and interest rates (I’m already dreading the final loan arrangement), the whole project has now reached a price of 1.2 million euros. We are currently cutting back on many of our planned features. We will probably also forgo the KFW funding since the €18,000 benefit doesn’t make a significant difference financially.
However, we will definitely keep the land. We have three kids (4, 5, and 7 years old) whose needs exceed our current living situation (only one child’s bedroom and no office space). So building is a must. Renting or buying in this area is simply not an option because the market is completely dry.
If I were in your position, I would definitely keep the plot and build on it.
Best regards