Bavaria and the real estate bubble

260 posts in this topic

 

 

The main problem is, that the bank will only lend up to 72% of the sale price.

 

Many banks will lend you 100% of the sale price, but you may still need to pay the makler, Notar... Of course borrowing 100% may mean you might not get the best interest rate. There are many online mortgage comparison websites (https://www.check24.de/baufinanzierung/) or go directly to the website of some lenders (https://www.ing-diba.de/baufinanzierung/).

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The main problem is, that the bank will only lend up to 72% of the sale price. That means that if we can gather up €100k between us and our families, that we can only get a house up to a value of €280k. That is the difficulty, because there are no houses here for that price. We would have to get creative in finding a way to get more Eigenkapital through family, or just wait and hope that someone needs to quickly sell a house and does not hold out for the highest possible price.

 

I think your missed a bit in your maths. If you found €100k the bank would lend you €280k meaning that you would have a total of €380k. From this you'd probably have ~5% costs so you could purchase something for €360k...

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We would essentially need to be quite mad not to buy (or in our case build) given how cheaply we can access the money and given that the repayments are fixed for the entire period.

 

Building however is not a fixed cost. If you haven't done this before, beware. The extras and costs associated not directly with the build but things that are required are big. If you get in touch with me, I can provide you with some figures from when we did it.

 

 

I think your missed a bit in your maths. If you found €100k the bank would lend you €280k meaning that you would have a total of €380k. From this you'd probably have ~5% costs so you could purchase something for €360k...

 

Further to that, why are you paying 1200 euros a month for 280k in today's market? You could easily get 400k for that now. So your real budget is close to 500k.

 

I think you're being too conservative by locking it in for 30 years. The reason they are giving you a historically pretty low rate on this is because they also don't believe interest rates are going up any time soon. Lock it in for 15 years, you'll be able to remortgage after 10 if the rates are still low, and if they are not, you've got 5 years to figure out how you're going to pay the mortgage if rates go up.

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Putting some numbers in here, with a 2% Tilgungssatz, you end up with a purchase price >500,000€ with 1.5% fixed for 10 years.

 

Here are some more calculators to play with: http://www.interhyp.de/rechner/

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I think your missed a bit in your maths. If you found €100k the bank would lend you €280k meaning that you would have a total of €380k. From this you'd probably have ~5% costs so you could purchase something for €360k...

 

You would be right however I also deducted the 8% closing costs. Since our local bank will not finance those costs, that 8% of the sale price will have to be out of pocket, and therefore minimize our buying power.

 

I am scheduled on Monday to talk to Postbank, who will do up to 100% financing, but I am a bit skeptical about the rates and the lengths of the loans.

 

I wish I knew a good alternative method to invest the bit of money we have in case we cannot finance a house here.

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I would forget about Postbank and go straight to Interhyp (or as already suggested Starshollow & Co) to get a wide selection of offers. Going to one bank here and one bank there is just a waste of your time and effort.

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has nearly doubled since the 1950s

So what??? Clearly this has NOTHING to do with the price explosion in German property over the past 5 years....before that prices were very very stable.

 

I will say it again - the price "bubble" (for those that wish to refer to it as such) over the past few years is ONLY caused by the financial costs of borrowing. It has feck all to do with the population levels.

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If the price "bubble" over the past few years is purely the result of the financial costs of borrowing, then this would mean that every town in Germany would have seen prices rocket. However, this is not the case.

 

One question mark is PLENTY. And please stop SHOUTING.

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this is a long read:

 

http://simple-living-in-suffolk.co.uk/2014/04/when-not-to-buy-a-house-a-cautonary-tale-from-a-quarter-of-a-century-ago/

 

I remember this, but was lucky enough to be bought out of it via relocation package.

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If the price "bubble" over the past few years is purely the result of the financial costs of borrowing, then this would mean that every town in Germany would have seen prices rocket. However, this is not the case.

If the price "bubble" over the past few years (ignoring your silly figures going back to the 1950s) is due to population - then this would mean there would have been no price increases in Munich in the past 5 years.

 

post-544-14261981965343_thumb.png

 

Take a look here:

 

http://www.globalpropertyguide.com/Europe/germany/Price-History

 

You can see prices are up in North East Germany, West Germany, South Germany. It is not a Munich effect and it is not due to population.

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Johnny... You are wasting your breath..

 

Its like taking guns from stupid people...

 

Remove the gun and you are still left with Stupid...

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@ Johnny Not a good effort. Your Bertelsmann numbers are a forecast from 2006, nothing to do with reality at all.

 

Munich's population 28th Feb 2015: 1 493 900

 

Obviously prices have been driven up by low interest rates everywhere in Germany, but places like Munich or parts of Berlin have seen greater rises due to an influx of new residents and more and more single households.

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(Zunahme 2014 gegenüber 2004 um 17,1 %).

From the same page. So that is.....1.7% per year over the last 10 years. I can see that having an effect, but what about the price rises over the rest of Germany?

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Supply and demand?

 

At any given time for the last several years in Munich and surrounds, there are/have been thousands of new units being built and all are sold before the end of construction. I often wonder where all of the people come from who buy/rent them.

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There are a lot "Village folks" that are leaving and heading to the city..

 

Many villages are just dwindling as there is no passing custom due to By-passes etc..

 

In the next village to me, we are in the process of converting a dis-used room of the Pizzeria and converting it into a "Youth center"...

 

Music system.. sat TV, Pool table, a couple of sofas and much more! All at OUR expense!

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The village to city migration has been going on for years. There is also a city to village migration because many people want to raise their kids in a different atmosphere with lower cost housing. My stepson and family left Munich to live in Vierkirchen some years ago and built a house there in a development that has completely sold out. Probably over 100 houses.

 

We see a lot of villages that are building up as well as many that are stagnant when we go touring.

 

Good on all of you for providing a youth center. That's a great idea!

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I think villages close to major cities will generally prosper but those beyond a reasonable commute to such cities will indeed dwindle, especially in the north of the country.

 

We've intentionally bought a plot that is large enough to accommodate 2 houses and we're building on one side only (will build a garage myself on the other side) so we can cash out when we get older and don't want to or can't maintain 1000m² any more. I see it as a solid investment, though we'd love it if one of our kids some day wants to build beside us, but they probably won't want to live next to the folks!)

 

Around Berlin right now there is a proper bauboom in progess. People are leaving the city for the commuter towns in Brandenburg and are being replaced (at a faster rate) by newcomers to Berlin itself. It's quite fascinating actually.

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I am scheduled on Monday to talk to Postbank, who will do up to 100% financing, but I am a bit skeptical about the rates and the lengths of the loans.

 

Postbank - where all the offers have asterisks.

 

 

I wish I knew a good alternative method to invest the bit of money we have in case we cannot finance a house here.

 

Why don't you follow the advice in post #101?

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If the price "bubble" over the past few years (ignoring your silly figures going back to the 1950s) is due to population - then this would mean there would have been no price increases in Munich in the past 5 years.

 

post-544-14261981965343_thumb.png

 

Take a look here:

 

http://www.globalpropertyguide.com/Europe/germany/Price-History

 

You can see prices are up in North East Germany, West Germany, South Germany. It is not a Munich effect and it is not due to population.

 

Duh. Read my original post, silly. I mention not only population growth but also 'changing demographics'. For example, more people live alone in Munich than any other large German town. This trend is growing.

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