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Clarified fixed interest rates
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Is there a price point beyond which it no longer makes sense to buy an apartment or house?

I am in a very frustrating situation right now. I have accumulated a decent amount of value in cash and stocks. My wife and I however are still living in a rented small flat in our town in Austria where we are paying quite a high rent (600 EUR per month just for the rent without anything extra). We have been planning to buy a new or used apartment or if possible a house but real estate prices have been on the rise in Austria non stop since 2004/2005 to the point that in order to acquire even a small somewhat family friendly apartment, we have to pay around 300,000 EUR, with small houses even starting at 400,000 EUR.

Interest rates of course are quite low at the moment. However, fixed interest rate loans are allowed for a maximum of 20 years. We calculated that if we want to pay our current rent plus 100 EUR (700 EUR) a month as a monthly loan repayment, we would be able to get a 20-years loan of approximately 150,000 EUR which is half the amount we need to buy a small flat with one single bedroom for children. Which means that even with my decent savings, we cannot afford to buy even a small somewhat family friendly apartment for just one child (with one child bedroom).

At this point, the question arises — does it even make sense to buy an apartment to live in or is it now a better alternative to keep renting and wait for the real estate market to cool off? Median monthly income after taxes, pensions and healthcare in our region is 2,200 EUR by the way. How does a median income like that still allow homes to become this ridiculously expensive?

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