What should be the relationship between the affordability of buying versus renting?
What should be the relationship between the affordability of buying versus renting? abrdn make an interesting comparison in Germany:
“Our estimates, based on the German housing market, suggest that renters currently save around €525 per month by renting compared with owning the average two-bed apartment. We estimate that for the affordability of renting and owning to reach parity, either rents would need to rise by 42% or house prices would need to fall by 30%, based on current elevated mortgage rates. A simultaneous 21% increase in rents and a 15% fall in house prices would also result in affordability finding an equilibrium.”
It would be nice to see a time series though, showing affordable of buying versus renting over time, particularly versus house price growth expectations. Oh, it would be nice in multiple jurisdictions too…!
Latest Thoughts on Risk
Latest Thoughts on Risk
