New build in difficult times? When does it still make sense to build?

Current reporting suggests that most people are currently unable to afford their own home. In an article for MDR, Corinna Merzyn from the Association of Private Builders complains about a real slump in the market. Despite these challenges: Why is there still a lot in favour of new builds? And how can you build successfully despite the high costs?

The housing and property market will remain under pressure in 2024. The construction industry is also facing increasingly difficult conditions as a result of this development. Increased construction costs, higher interest rates and a lack of tradespeople, as well as unforeseeable changes in the framework and subsidy conditions, are making the situation more difficult for those looking to build.

Why a new build can still make sense

Although the cost of a new build has risen since 2022, it is actually easier for builders to finance a new build today compared to 40 years ago. This was also recently confirmed by a study by the German Institute of Economics in its affordability index. Compared to the crisis in 2022, it shows that the rise in construction prices has already slowed and interest rates have largely levelled off between 3.5 and 4.5 percent.

Housing will continue to be scarce in the future. Investing in residential property is therefore an investment in the future, even in difficult times. Homeowners secure their long-term independence from the rental market and have the opportunity to design their home according to their own ideas. In addition, a new build meets the latest construction standards and long-term refurbishments are no longer necessary. However, construction costs vary considerably depending on the urban or rural location. According to Corinna Merzyn, owner-occupied homes have become significantly more expensive, especially in sought-after metropolises.

How to build successfully despite difficult conditions

For families who don’t want to postpone their dream of owning their own home, moving to the suburbs could be an option to keep financing costs in check. If you have a limited budget, consumer advocates recommend possibly opting for fewer square metres or an alternative location and saying goodbye to certain dreams.

Utilisation of subsidies

In Germany, building owners have a wide range of subsidy options at their disposal. The Kreditanstalt für Wiederaufbau (KfW) grants home ownership loans, and the federal government promotes favourable home loans for families as well as environmentally friendly new builds. Many federal states also offer their own subsidy programmes. If you want to realise your dream of owning your own home despite the challenging times, you should also make full use of these opportunities. The support of a local estate agent can help you find the right solution.

Are you looking to buy your own home and are unsure which form of housing suits you best? Get in touch with us! We will be happy to advise you.

Notes

The generic masculine is used in this text to improve readability. Female and other gender identities are expressly included where this is necessary for the statement.

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.

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