Bavaria and the real estate bubble

260 posts in this topic

 

Johnny... You are wasting your breath..

 

Its like taking guns from stupid people...

 

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

 

You clearly feel Johnny needs your constructive support... :D

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I seem to recall a few years back when someone asked the same/Similar question about Buying V Renting ( Which is what the thread has turned to)

 

JE was all for Buying and Hutcho was against it... thats if memory serves correctly..

 

I wonder if hutcho has the same view-point now that he is a Proud house owner!

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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!

 

Have property prices gone up in these dwindling villages near you?

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If I use the same "search criteria",, there are fewer properties...

 

If I increase the price, then there are more properties...

 

As Murphap says... there are more folk that are prepared to travel.. Maybe because they get more for their buck... or simply that they dont mind driving for 50 minutes after work..

 

As for my place.. I paid cash... .. so I was in a situation where I was controling the sale..

 

from my place to FFM central station usually takes 70 minutes... Taunus anlage 60...

 

The place is 300 yrs old.. huge garden and loads of out-houses...

 

The cost was less than 100k...

 

Where can you get thet in bayern?

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Where can you get thet in bayern?

 

E.g. about 20 km from Würzburg/Schweinfurt

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You are indeed correct...

 

100K limit... 20 KM form Würburg... 6 Properties

 

100k limit ...20 KM from Heidenrod... 104Properties..

 

But living in Bayern also costs more...

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JE was all for Buying and Hutcho was against it... thats if memory serves correctly..

 

I wasn't arguing against buying a house in all cases. I was against the typical Australian/American/British view that buying a house is always better and paying rent is throwing money down the drain. My position on that hasn't changed.

 

There are plenty of people that have no doubt done well on property in the last 5 or so years in Munich, but in other times, and certainly other places, they would have been better off renting.

 

Renting is not necessarily throwing money down the drain, and buying is not necessarily a good investment choice.

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The above is all correct but reminds me of a discussion the other day about "pensions". The #1 best thing about a pension plan is NOT the level of investment in the stock markets, or even the tax savings....the #1 thing is that you are forced to save the money and not spend it.

 

Same with renting against purchasing. On paper it may well be that people *could* be better off renting and then investing an extra €xx in the stock market every month...but in the real world it doesn't happen - they spend it on beer and holidays.

 

This is why people that buy property will be richer than people that don't when they retire - in 9 out of 10 cases.

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Maybe rates are creeping back up. I know the rate we have agreed with the BSK is no longer available (gone up from 0.85% to 1.05% for the 8.5 years fixed interest only part of a Kombikredit).

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I can get fixed stuff down at around 1.4% fixed but 0.8% was kinda mental sounding - did that come with extra restrictions? (i.e. did you have to buy their life insurance or house insurance or other such bollox?)

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No, I mentioned it before in the thread...the Vermittler is family so he's knocking his commission off. it would normally be 1.25% (well, 1.45% now) but that includes his 0.4% commission. We also have a large(ish) amount of Eigenkapital relative to the loan, so that helps obviously.

 

As I say though, it's just the interest only part of a Kombikredit and the Bausparvertrag pays a relatively poor 0.25%...you can't compare these products directly with normal repayment mortgages if that's what you were doing as you have to account for the loss on the Bauspar part (which we have done and it works out all in all at 1.46% APR fixed for 17 years 2 months on a 270k loan with a total cost of credit of 36k-it is a very good deal to get it fixed at that rate for so long. It could in fact be cheaper, depending on prevailing rates in 8 years, but it cannot be more expensive).

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I just read an interesting article from Canadian Globe & Mail saying that the rule of absolutely needing 20% down payment should change. That the costs of houses are raising so much each year that you better buy now, and get a loan insurance, then wait 3-4 years and see the same house go up 3-5%. Of course the Canadian real estate market is its own story, but I would appropriate everyone's views on this.

 

i'm also interested in reviving this thread following the arrival of the migrants.

 

is now a good time to buy? Will property costs decrease especially in areas where there are refugee camps? Or will they increase because the city is more crowded and hiking up demand? 

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I'd imagine the Canadian housing market is substantially different to Germany's, not to mention the financial/interest rate situation being different too.  I wouldn't see how anything you read about Canada being remotely related to the German housing market.

 

The migrants will be distributed around Germany and will not end up having much of an effect on anything in my opinion.  It might put some pressure on the hosing market in the short term, but new properties will be built.

 

What is driving the housing market right now is the virtually free money you can get from the banks.  Interest rates are below inflation and everyone is looking to buy something.  If they go up, I can certainly imagine that the prices will fall, especially around Munich.

 

When they go up is anyone's guess though, and it doesn't necessarily make financial sense to wait, because even if you save 100k on a house, you're going to have to pay the extra interest on your loan which could end up costing you a similar amount.

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Well, it has been a long time since I started this subject, and my viewpoint has changed slightly. What I mean is that as an American, I was always assuming I would pay off the house entirely over 30 years, to be rent free by the time we're retired. Well, we really won't need a house once the kids are studying, and will probably downsize anyway. That means that taking a loan for 15 years at these low interest rates could very well be the best choice. We are currently paying €7,800 per year on our "cold" rent. Interest on a €400k place would be less than this per year, with a downward trend. Right there, it would be worth it, assuming maintenance on the house stays within the margin of Rent we were paying minus the Interest on the mortgage. Also assuming that the house will not depreciate for when we'd sell it in 15 years.

 

So I am currently looking with renewed elan, but there is for all intents and purposes nothing left on the market in our area. How did you guys find your houses? Private tips, or just luck? The best I can find are old shacks that need major renovation for €350k. I have seen over the last two years however DHHs built in the 70's and 80's for €350k to €380k, but just didn't jump on them due to my preconceptions about buying at the time.

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This is what happens when you sit and stare at the problem for a long time!!  Someone else solves it for you!

 

You should have done it 2yrs ago when you could find properties that fit your budget..

 

BTW.. not sure that you will get a property loan for 15 yrs... Usually they are 10yrs, then your re-mortgage....

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5 hours ago, dmbartender said:

So I am currently looking with renewed elan, but there is for all intents and purposes nothing left on the market in our area. How did you guys find your houses? Private tips, or just luck? The best I can find are old shacks that need major renovation for €350k. I have seen over the last two years however DHHs built in the 70's and 80's for €350k to €380k, but just didn't jump on them due to my preconceptions about buying at the time.

 

 Of course, everyone else has done the same sums too, and that's why there is nothing left and what is still available is even more expensive than before.

 

5 hours ago, SpiderPig said:

BTW.. not sure that you will get a property loan for 15 yrs... Usually they are 10yrs, then your re-mortgage...

 

You can get 15, 20, 25, 30 year loans, however the interest goes up the longer you get it for.  By law, you can get out of these loans after 10 years if you want without any penalties.

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I appologise if I was wrong...When I took out my last Loan/Mortgage, it was about 10 yrs ago... maybe thinghs have changed... Mybank manager told me only 10yrs was possible, ( maybe it was wage and property value that governed this...

 

My current house was paid in cash.. so I dont have the restrictions or complications that banks incure!

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Well I have been observing the market since longer than 2 years, and even back then there was not much to be had. Like I said, few and far between were DHH from the 1970s. I was kind of hoping something better would turn up.

 

Ach, who knows. I am zwiegespalten. I would like to invest, but on the other hand, who knows if Europe will remain a safe place to live, considering the recent terrorist attacks in Paris, the IS threats, and the hundreds of thousands of people we are welcoming with open arms from the IS region of the world. I bet 99.9% are good people, but it only takes a handful of idiots to screw things up. My wife said that if this influx of refugees makes Europe unsafe, that we can pull anchor and get the f**k out anyway. In that case, it would be good to remain liquid.

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I gave some thoughts on buying last 12 months, and have the money to buy. But have stopped after seeing the current prices.

I live in a >65sm well renovated apartment in Nürnberg, and pay 400 cold. So I see no reason right now to start searching for a property, where me and my GF pay less than 15% of income for renting :)

 

Some weeks back I saw an apartment somewhere in Munich, 350K, where a old cpouple are living for more than 20 years. They pay 570 cold, and 200 is hausgeld, meaning you get around 370 - 380 EUR rent per month. I am guessing it wont be easy to drive them away or up the rent much, (as this info is mentioned in the advert). 

Now do the mathe, it will take like 60 years to get your money back (without adding renovation and other closts). But I am sure it will be sold very soon. So I disagree with the idea that everyone can do the MATHE. I guess many cant - they are simply bombarded by the idea that interest rates are historic low. But I dont undersrand what does it bring if you save 50K in zinses, but the apartment is already 100k teurer? 

 

" However, our former landlord who has massive rental property in Stuttgart told us to wait 10 years when the old people like himself start to die. There will be a glut on the market and prices will drop. . "

Germany has negative birthrate. The immigrants that are coming will cost a lot for the social system. And after 10 years, probably 50% will still remain jobless (example from Sweden). And many of them wont work enough years to pay good rente for them later on. So they are not a real positive fo German negative birthrate. All over EU we have deflationary pressure, how long can the Central banks print money ? Look at Japan to have some ideas what can happen to EU next 20 years.

 

So I am also not sure whats gonna happen to housing in 15 years, I see very less reasons for the price explosion of last 3 years. One of my friends who bought a 10 years old Apprtment in Ottobrun close to Munich costs around 80% more after 4 years, this is crazy for housing price (Immobilie  means not mobile after all :)) 

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