Building is more expensive than ever, but new construction can still be worthwhile

5 min

The prices for real estate and residential property are still rising and there is no end in sight. Skeptical forecasts are simply ignored by the real estate market and even the corona pandemic was unable to trigger a decline in demand. On the contrary: The Costs for building materials, craftsmen and land only seem to know the way up. There are several reasons for this: The historically low interest rate environment is one of them. And that’s why it can be said: building is more expensive than ever before, but that’s why it is Money for it very cheap to get. Why building a house is cheaper than many would like to believe.

Are you building more expensive than ever before? Why the calculation is more complicated than just a historical comparison of construction costs …

The real estate industry in Germany has been experiencing a real boom for around ten years. the Real estate appreciation is now not limited to popular cities such as Munich, Frankfurt, Stuttgart or Düsseldorf. Even in rural regions as well as in the bacon belt of Big cities prices rise significantly. The result is that rents are also rising because investors and landlords expect a good return on their investment, while the investment sums keep increasing.

Many low-wage earners fall by the wayside because a large part of their income is spent on rent and ancillary costs. And as a normal wage earner, the question arises whether property is still worthwhile now. Anyone who finds an affordable condominium or house is in competition with a large number of other interested parties, who are often in the Bidding process want to spend more than the original purchase price actually asked.

There is only one alternative left: New building according to your own ideas. Building a house has of course not exactly become cheaper, but there are some advantages that builders can benefit from in the current environment. Here are the pros and cons of building a home.

Advantages: dreams, sustainability, funding programs

One of the greatest advantages of a new building is the realization of your own ideas. In the old building, the design options are quite limited and you have to make a lot of compromises. In the case of a new building, however, clients can incorporate all their wishes and dreams into the planning. You can specifically address your own family planning and build a corresponding number of children’s rooms. The architect also takes into account special hobbies and appropriate spaces for their exercise.

Even cheap prefabricated solutions today are made up of various elements that can be exchanged or expanded at will. A prefabricated house with a basement is just as feasible as an individual solid house. And when it comes to saving energy, the prefabricated houses of today can hardly be compared with those of older generations.

Due to the high demand, prefabricated houses have also become more expensive. It is all the more important to pay attention to government grants and funding programs when planning costs. This is particularly important when it comes to energy efficiency. Because those who build sustainably are also supported, for example by KfW programs for efficiency houses.

What many do not know: With the Riester program, the state not only supports savers in their old-age provision. With the so-called Wohn-Riester, owner-occupied properties can also be financed. If you want to learn more about home ownership, read the concise explanation on the subject Residential trustee with the experts at

Tip: Before you start calculating a construction project, you should first know the development over the past few years and understand which factors influence your construction costs. In this way, you can estimate what is in store for you and, if necessary, plan in buffers for unpredictable costs.

Why building is getting more and more expensive

1. Rising costs for building materials and wages

Construction costs are not only caused by the substances and materials used for construction. Workers must also be paid. Both aspects are affected by price increases. Builders now have to pay significantly more for wages and raw materials than they did a few years ago.

Several factors are responsible for the high construction costs: In addition to expensive building materials, increasingly stringent environmental regulations are associated with higher costs for building owners. Such factors make building more expensive than ever, at least at first glance.

The Federal Statistical Office calculates that the prices for new buildings in Germany alone will have risen by around 3.1% from 2020 to 2021. Above all, the costs of wood, concrete and masonry have increased. But sanitary facilities and skilled workers such as electricians and carpenters also cause higher expenses today. the Construction and property price index shows a price increase of around 29 to 65% for the period between 2010 and 2020. At first glance, it looks as if construction is more expensive than ever before.

2. Energy and building regulations

Another cost factor that is more significant today are building regulations relating to energy efficiency and environmental requirements. Housing should be built more sustainably. For this purpose, new standards apply with high demands on both the building material and the construction. Today’s energy standards are no longer comparable to those a decade ago.

3. Less building land

A clearly noticeable reason for higher new construction costs is the lack of suitable building land. Many municipalities are holding back with the designation and allocation of building land. This increases land prices. It can hardly be assumed that this trend will quickly and extremely turn in the opposite direction. The reason for this is clear: our planet, the earth, is limited. While the demand for their own property is increasing through prosperity and higher living standards, hardly any new land will be added.
Anyone who has already found or even owns the right property can consider themselves lucky. In this case, building a new house is certainly the better alternative to buying an old building. You can find out which aspects you should consider when building your house in our guide on the subject of house and construction.

4. Cheap money that banks no longer want

More and more banks are starting to introduce penalty interest on account balances. The message from monetary policy and central banks is clear:

We don’t want your money. Take it and spend it!

The decisions of the ECB have resulted in banks having to pay for parking money. The money should stay in circulation and serve the economy. For this reason, almost everyone with a good credit rating and a reasonably secure income gets large loan amounts at very attractive interest rates.

The currently usual loan conditions are almost a gift to borrowers. For this reason, you should not only consider the increased prices for construction and real estate when making your calculations. You also need to offset the historically low cost of interest and repayment. Then you will find that there is hardly any time in the past that you have been able to finance large construction projects or property purchases more cheaply.

Photo credits: Adobe Stock / schulzfoto, Adobe Stock / Gina Sanders (sorted chronologically or according to the order of the images used in the buying guide)


Passionate about DIY for over 10 years and all the new tools, I give you through this blog all my advice, tips, tests in all areas: carpentry, electricity, masonry, gardening, home automation ...


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