The existing property – more central location and better price

Existing properties have many advantages

Some of the advantages of existing properties are obvious: "What you see is what you get" – the "second-hand" house can be viewed and is ready for occupancy more quickly – so there's no double burden of rent and mortgage payments. Furthermore, the homeowner has to invest significantly more time, energy, and effort in the planning, permitting, and construction phases of their own home than the buyer of an existing property – and only in the best-case scenario do they get exactly what they envisioned.

"New brooms sweep clean," as the saying goes. And those who can afford it prefer to buy a new product rather than an old one. However, this isn't the case with real estate. According to Interhyp, Germany's largest mortgage broker, Germans more frequently opt to buy a used property than to finance a new one: Of all mortgage loans, only 30 percent are for new construction, while 40 percent are for the purchase of a used property.

A key aspect of this decision is location: Building plots near city centers are scarce, especially in more desirable metropolitan areas. New developments are built on the outskirts and in the suburbs and naturally lack an established environment with intact infrastructure.

Even the prospect of "living in a green setting" on building land is still years away. "In a good location, an existing property is worth just as much as a new build in a peripheral area," confirms Kurt Friedl, Managing Director of RE/MAX Germany Southwest. And then there's the price difference: With manageable renovation needs, an existing property costs on average 55 percent less than a new build – which is also difficult to calculate in terms of cost.

The LBS building society group estimates the average cost of new construction in Germany at around €230,000. In contrast, an existing property costs only €148,000. And it is foreseeable that construction costs will continue to rise, partly due to more expensive land and partly due to laws and regulations such as the Energy Saving Ordinance (EnEV), compliance with which will require increasingly more labor and materials in the future. For existing properties, however, the EnEV requirements are currently only relevant in the context of renovations.

Be careful when buying real estate!
To avoid unpleasant surprises after the purchase and to keep renovation costs for existing properties within budget, it's advisable
to consult a surveyor before signing the contract. This is because, as a rule, there is no warranty, or it only applies to newer construction work. The purchase contract can only be contested if hidden defects were fraudulently concealed. Proving this is, in our experience, difficult. However, if the surveyor overlooks significant defects, they can generally be held liable.
But even those building new homes aren't immune to serious construction defects. The key here is the contract drafting. Paul Popescu, a member of the German Bar Association's Working Group on Construction Law, advises prospective homeowners to seek advice from both a specialist lawyer for construction and architectural law and a qualified building surveyor well in advance of signing the contract: "Expenses of one percent of the construction sum for expert advice are easily recouped through fewer defects and saved additional work costs by the time of final acceptance."

Sources: Interhyp Baufinanzierung, LBS Bausparkasse, ARGE Baurecht
Arbeitsgemeinschaft für Bau und Immobilienrecht im Deutschen Anwaltverein (DAV) eV