Navigating Home Purchase Decisions: Key Strategies for Successful Homeownership
For many, the decision between building a new home or purchasing an existing property can be a challenging one. Both options have their unique advantages and disadvantages, and understanding the costs involved is crucial in making an informed choice.
In Germany, the average cost of constructing a solid house with 150 square meters of living space is approximately €620,000, although this figure can vary significantly depending on factors such as location, materials, and construction type. According to industry estimates, the cost per square meter for a conventional house ranges between €3,000 to €5,000.
Building a home offers design freedom, allowing homeowners to customize layout, materials, and features to their liking. However, building a house can be more expensive than buying due to the difficulty of accurately calculating costs and potential delays. The loan for construction is usually drawn in stages upon presentation of invoices for construction progress, and additional interest charges may apply if the construction period exceeds the loan period without charges.
On the other hand, purchasing a home provides the immediate benefit of move-in readiness, with necessary renovations that can be done at leisure afterwards. Additional costs for house purchase are usually 10-20% of the purchase price and can range from €30,000-€60,000 for a single-family house priced at €300,000.
The plot is the most expensive part of building a house, accounting for around 40% of the average house construction costs. The real estate price for a terraced house with 100 square meters in a medium to good location and a typical plot of land varies greatly, with prices in Munich being approximately €1,300,000 and in Chemnitz being €280,000.
Renovation costs for an existing property can range from €5,000 to €20,000 for solar energy installation, €100 per square meter of roof area for a new roof, €1,200 for a new bathroom, and €5,000 for a new kitchen, among other costs. The initial design of the outdoor areas for a new home can cost around 12-18% of the construction cost, or approximately €88,000 for a house costing €590,000.
It's worth noting that banks usually grant an annuity loan for both house purchase and construction financing, which is repaid monthly in agreed installments plus interest. Banks usually grant lower loans for older properties than for newer ones in the same location when granting a loan for a house purchase. Banks usually conduct an immobilienbewertung before granting a loan for a house purchase, determining the market value of the house plus risk deductions.
In many cases, buying a house is cheaper than building a comparable property. However, the decision ultimately depends on personal preferences, financial circumstances, and long-term goals. It's always advisable to seek professional advice and carefully consider all factors before making a decision.
References: [1] Statista (2021). Average construction costs for a single-family house in Germany in 2020, by construction type. [online] Available at: https://www.statista.com/statistics/1093079/average-construction-costs-for-single-family-houses-in-germany-by-construction-type/ [2] Bauen-in-Bayern (2021). Baukosten pro Quadratmeter. [online] Available at: https://www.bauen-in-bayern.de/bauen/baukosten/baukosten-pro-quadratmeter/
- Understanding the costs involved in both building a new home or purchasing an existing property is essential for making an informed decision, especially since the average cost of constructing a 150 square meter house in Germany is approximately €620,000, compared to the cost of purchasing a single-family house at €300,000.
- Building a home offers design freedom, but it can be more expensive, with the plot accounting for around 40% of the average house construction costs and additional interest charges if the construction period exceeds the loan period.
- On the other hand, purchasing a home provides immediate move-in readiness, with additional costs ranging from €30,000-€60,000, and potential renovation costs for solar energy installation, roof replacement, bathroom upgrade, and kitchen renovation.
- Banks may offer annuity loans for both house purchase and construction financing, repayable in monthly installments plus interest, and they usually grant lower loans for older properties than for newer ones when granting a loan for a house purchase.
- It's worth remembering that buying a house is often cheaper than building a comparable property, but the decision ultimately depends on personal preferences, financial circumstances, and long-term goals. It's always advisable to seek professional advice and carefully consider all factors before making a decision.
