Discussion in 'Current Events' started by VorZakone, Apr 18, 2018.
I’d take any economic prediction over that timeframe with a massive pinch of salt.
I'm a millennial?
Generation X was a bit shit. Windows 8 of humans. Discuss?
Is this really that outrageous a claim though? Of course it can change if the right policies are put in place etc., but surely this is a study saying "this will most likely happen if nothing changes"?
Sure. But “nothing changes” would be a wildly inaccurate prediction to make about the economic conditions over the rest of a millennial’s life.
Is that a bad thing? Buying a flat or house is pretty much at the bottom of the list of my life's goals.
Oh for sure. But I'd worry any changes would be in the wrong direction from our perspective. So it's just to say that someone (politicians) should think hard about how they want the future to pan out with regards to housing as I don't think the current situation is sustainable in the long run. I don't think you can discount the point of this study on the grounds that "things will change anyway", when it might be this type of report that helps make the change happen in the right direction.
It's more than that. I read an interesting article by a linguist a while back that claimed the reason Germany (I am German) has one of the lowest home ownership rates in the developed world is that the German words for debt (Schulden) and guilt (Schuld) are almost identical and that's one of the reasons why Germans are very averse to taking out loans (actually they are the same, but for debt you would typically use the plural). Personally I would never take out a loan for anything and only ever consider buying property if I had the cash. And I know many people who feel the same. I'm quite happy to pay rent for the rest of my life.
Home ownership in the 45-64 age group is roughly 70% at the minute. Is this really that dramatic a headline?
The rental system in Germany as far as I'm aware is a lot better than most places in the world. More favourable to the tennant than the landlord. I believe the rent prices are a lot more regulated and people generally sign contracts for a much longer time which keeps the prices steady.
I also met a guy, and he was telling me the flat he rents in Hamburg is almost non-profit. Before he rented the house he had to buy some form of membership in the property group, then at the end of the year the profit the group makes from rental is then redistributed back to Tennant's/members. I've probably done a really bad job of explaining it, and you've probably got a long - ass word for it anyway.
You do realise that when you agree a contract with a landlord, lets say 12 months. You're essentially in debt to them for 12 months and agree to pay it back at a set rate each month.
At least with a mortgage after 30 years or whatever, generally paying less money each month than if you rented, you get to own the house at the end of it. When you're renting, in this country at least, you're usually paying the landlords mortgage for them.
Yeah, you’re right. It’s the clickbaity headline I’m objecting to but the issue being discussed definitely has some substance. Arguably one of the biggest problems society has to find a way to deal with. The way that wealth has got locked down into capital over time.
Gen X is the best generation. fecked from both sides, cynical, jaded and with insight into both the past and the future having grown up with the new technologies appearing.
Damn we're cool, now I stop to think about it. The Kurt Cobain of overly broad generational categorization.
Essentially yes. But that's a lot more manageable and definitely preferable to owing someone a large amount of money for the next 30 years. To me at least.
FWIW my rental contract is of indefinite duration with a three-month notice period which I think is standard for German law of tenancy.
Obviously there is the chance that house prices could crash but you can always sell the house and clear that debt off, people often make a very tidy profit in the process. There is also nothing stopping you renting the property yourself and being in the position where the tenants pay your mortgage for you.
The house you take out the mortgage on is collateral for that loan. You can walk away at any time. Just hand over the keys. If you can afford to pay a mortgage then fear of being in debt isn’t a very rational reason for not doing so.
If you live in a country that makes it easy to rent, like Germany, there are other good reasons to avoid buying a home though. Maintenance is a hassle and when you rent that hassle sits with the landlord.
I'm surprised it's only a third.
The vast majority of millennials I know in Dublin don't earn remotely enough money to buy a place, even as couples, and their wages won't increase enough over the next decade to keep up with the rate at which house prices are increasing.
For me, home ownership provides you with that added level of security in retirement. I would hate to be at the mercy of a landlord with rent to pay should i still be around in my 70s.
* In Britain.
The Dutch housing market is completely fecked up at the moment too though. Loads of people ‘own’ their houses, but I get the suspicion ultimately this is only good for the banks. I also think we’re on the verge of some kind of Japanese scenario.
Even with the current low interest rate, our national ‘deduct your mortgage from your taxes’ scheme costs the taxpayer about 15 billion euro a year. And if interests go up it’ll obviously double to triple. 40-50 billion a year is simply not manageable within our current national tax expenses. And on top of that the option of mortgage interest deduction has consistently led to people being able to loan more, creating an even higher demand which also inflates the prices.
I’m glad I saved up for seven years and bought something at a significantly lower price than I could afford, so I can’t really ever get in trouble. Maybe upgrade if a 2008 type of bubble bursting starts taking place.
I would say it's higher if you add in the people (like me) who still live with their parents, to avoid paying rent & allow them to save up enough for a deposit.
You may own the house afterwards, but usually you put equity up for it 30 years ago. If you had rented you could have used the same equity for other investments with a duration of 30 years -> opportunity costs.
There is no reasons why - on average - buying should be better than renting from a financial point of view. It's a zero sum game between buyer/tenant on the one side and seller/landlord on the other side. If buying is clearly better than renting from the point of view of the buyer/tenant than for the seller/landlord renting out would be clearly better than selling. Thus, you would expect property prices and rents to converge to a certain ratio. From a seller's/landlord's perspective the value of his property is the present value of future rents that he expects to collect. So, property prices and rents are linked.
Now, obviously, there are sellers that aren't professionals and that may not hire a professional real estate agent, so there is some room for lucky buys. But most private buyers aren't professionals either, so they typically won't be able to identify such lucky buys. It probably evens out.
Unless there are special circumstances, the decision for renting or buying is much more of a lifestyle choice in my opinion.
Interesting, didn't know that. But surely the Landlords will always be the same, passed down family generations? You could just get lucky born into a family that owns house which is rented , which leads to being able to afford more houses that you can rent out and so on.
It's not much different here, but like people have said you can get a mortgage, own the house after 30 years and break that chain and enable your own family to rent/buy etc.
Deposit only goes so far. If you don't have the wage to afford the mortgage you haven't got a chance.
In England it can be far more expensive to rent than buy.
My place I currently live would cost me £450 less a month to buy, and that's with a reasonable rent for the area, hence why we are saving for a mortgage deposit. Plus I want something to leave my boys when I go other than money and all that.
I don't think the wage is too much of an issue to be fair, the average salary is about £28k now? Graduate jobs pay on average £24k and scale above £30k within 5 years or so.
How does that work? When you pay off a mortgage (assuming it’s not interest only) that money goes towards paying for an equity (your house). When you rent that money is gone forever. If renting was substantially cheaper than paying a mortgage - and you’re disciplined enough to dilligently invest the difference - then you might avoid those opportunity costs. Unfortunately there rarely is a huge saving to be made paying rent vs a mortgage and people are notoriously bad at a) saving money and b) investing it wisely. All of which means that a mortgage is an extremely sensible investment for the vast majority of people.
That depends on where you live. In Copenhagen for instance you wouldn't get more than a small two room apartment which you wouldn't really own in the end anyway.
Plus the Germans apparently don’t invest that much in reality.
Still though, I get the sneaky suspicion that their ‘model’ is more sensible and durable over the course of a hundred or two hundred years, but that’s based on nothing but a hunch.
Absolutely. A hell of a lot changed in my life so far. Many of the financial predictions proved to be wrong and most analysts certainly messed up in not predicting the crash in 2007/8, even with a tonne of evidence staring at them in the face!
I'm part of a housing cooperative which are fairly common in Germany. Here's an English explanation: https://www.wohnungsbaugenossenscha...ioniert-genossenschaft/how-cooperatives-work/. What this means for me is that I had to acquire shares when I joined (roughly 2,500€ worth) but the monthly rent is very low (360€ for 48 m² with balcony in a nice residential area near the centre), I don't have to take care of anything (maintenance, cleaning etc.) and cannot be kicked out.
Interesting. Those cooperatives seem like a brilliant idea. We’re crying out for initiatives like that in Ireland.
Oh yeah it's massively dependent on where you live, my example applies primarily to the UK.
That depends where you are. if you're in a more rural area with cheaper housing and decent wages then sure, you might be able to.
But I was talking about Dublin, where a house in a decent area is maybe 350-400k minimum, so you'd need around a 300k+ mortgage = €75k salary = way beyond most under the age of 30 and even beyond a lot of couples under the age of 30, and over 30, too.
I like the idea, wonder why it's not more popular over here.
To be honest, I'd just like to live somewhere without magnolia walls.
I'd imagine most first time buyers aren't looking at more than a 2 bed apartment, and depending on circumstances 1 bed would be adequate just to get on the property ladder, not necessarily a house.
If those prices are for 1 & 2 bed apartments in Dublin then your house prices are similar to London, which is crazy!
Can't speak for other countries, but I think it's a lot down to choice in Norway.
Yes, owning your own home is expensive and something you have to want enough to put money aside for a few years in order to be able to acquire but it's far from impossible for anyone not in a similar situation to mine (hell, even then you can make it).
I think it's more down to a lot of people not bothering with saving up.
Mind you, I don't mean you can live wherever you want, but in proximity.
Then again most people in Norway will likely end up owners.
It's not quite London levels, but Dublin is pretty bad. A 2 bed apartment in a good area will be around 300k minimum. It's similar to London in that certain professions (financials, IT, accountants, consultants) are on high wages, demand is really high, and supply is really low, so prices are sky rocketing.
Watch or read freakonomics. The personal wealth of a renter v an owner is minimal over a perio d of 30 years.
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