Amount spent by private renters is approaching parity with mortgage payments
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Re: Amount spent by private renters is approaching parity with mortgage payments
#2In a free market, rent will always be higher than cost of a property. If it were less, the property is an unprofitable investment and should be divested.
This article drops critical context. 10 years ago, one of the earliest and most potent warning signs of the coming collapse was the extreme disparity between rents and mortgages. Home prices skyrocketed while rents remained relatively flat. And just a couple years before that, there were weekly newspaper articles about the unprecedented reversal of the rent-to-mortgage ratio.
Re: Amount spent by private renters is approaching parity with mortgage payments
#3Approaching? I could already save about 1/3 of my monthly payments by getting a mortgage instead. The only issue is the deposit to get the mortgage, it's hard to save up enough money as it is.
Re: Amount spent by private renters is approaching parity with mortgage payments
#4What isn't mentioned in this article is any commentary regarding the falling rates of home ownership in various countries compounded with rapid price increases (driven by low rates and zoning policies). This is particularly acute as it appears to be driven predominately by a generational gap as opposed to a socio-economic gap. Pitting the young against the old is never a good thing.
What is also missed completely is the rise of the professional share house. How many professional people on high incomes are now forced into multi-person rental accommodation due to affordability concerns.
Re: Amount spent by private renters is approaching parity with mortgage payments
#5In a free market, rent will always be higher than cost of a property. If it were less, the property is an unprofitable investment and should be divested. This article drops critical context. 10 years ago, one of the earliest and most potent warning signs of the coming collapse was the extreme disparity between rents and mortgages. Home prices skyrocketed while rents remained relatively flat. And just a couple years b…
Interesting! Germany seems to be in the situation you described as "10 years ago".
Re: Amount spent by private renters is approaching parity with mortgage payments
#6The proposals laid out by politicians in the article, bear no sense of the hidden costs of zoning :-(
Anecdotal: Visited a friend in London a while ago, she bought her terrace "house" (2 stories, a width of 5 meters) for 500k GBP in Wimbledon. The condition of that thing screamed "landmarked" and "dump" at the same time, while all I heard was "artificial scarcity"...
Re: Amount spent by private renters is approaching parity with mortgage payments
#7In a free market, rent will always be higher than cost of a property. If it were less, the property is an unprofitable investment and should be divested. This article drops critical context. 10 years ago, one of the earliest and most potent warning signs of the coming collapse was the extreme disparity between rents and mortgages. Home prices skyrocketed while rents remained relatively flat. And just a couple years b…
> In a free market, rent will always be higher than cost of a property. If it were less, the property is an unprofitable investment and should be divested.
That's assuming you finance your property with debt and let someone else pay for your debt. If you either happen to own a property you don't use, or own the property you live in, it makes perfect sense.
You're describing everything that's wrong about the property market: owner expecting properties to magically create money out of someone else's labour.
Re: Amount spent by private renters is approaching parity with mortgage payments
#8The proposals laid out by politicians in the article, bear no sense of the hidden costs of zoning :-( Anecdotal: Visited a friend in London a while ago, she bought her terrace "house" (2 stories, a width of 5 meters) for 500k GBP in Wimbledon. The condition of that thing screamed "landmarked" and "dump" at the same time, while all I heard was "artificial scarcity"...
Tbf, 500k for a house in Wimbledon sounds like an absolute bargain, even if the place needed another 100k in repairs. London is super crazy for property prices.
Re: Amount spent by private renters is approaching parity with mortgage payments
#9Approaching? I could already save about 1/3 of my monthly payments by getting a mortgage instead. The only issue is the deposit to get the mortgage, it's hard to save up enough money as it is.
But the deposit is a massive issue. If you put that deposit into stocks and shares (a diversified portfolio) you could (will probably) find that outperform the cost of your mortgage and maintenance together. If they could get rid of the deposit you might break even with a stocks and shares investment plan.
https://www.thebalance.com/real-estate-vs-stocks-which-is-th...
Re: Amount spent by private renters is approaching parity with mortgage payments
#10In a free market, rent will always be higher than cost of a property. If it were less, the property is an unprofitable investment and should be divested. This article drops critical context. 10 years ago, one of the earliest and most potent warning signs of the coming collapse was the extreme disparity between rents and mortgages. Home prices skyrocketed while rents remained relatively flat. And just a couple years b…
> In a free market, rent will always be higher than cost of a property. If it were less, the property is an unprofitable investment and should be divested.
perhaps this might be true asymptotically in a sufficiently-qualified rational, efficient, spherical, theoretical market. also, a market where tax laws don't give preferential treatment to renting or buying.
i'm currently renting in one of australia's major cities, the gross rental yield of this place would be something like 3% before subtracting costs (council rates, maintenance, interest, property management fees, insurance).