| Here in EU rent is much higher than mortgage. We have less space, cities are clutered, and many people live in apts that are smaller than your garages. The main reason why everyone is not buying is 20% down payment on your mortgage. Plus auxilairy costs. And in most cases you have to finish/renovate/furnish the place, so it's more like 30-35% of the sticker price. When you're young or not working in IT, and avg price for sqm is 12k while you're getting 6k/mth and you can barely save anything buying a house sounds like having holidays on a moon. How much is the premium I have no concrete data, but I have an anecdote.
I once found a lovely 65sqm apt with great layout but it was abondonded in the middle of renovation - the bathroom had two sinks, but only one was installed, the other was in the cardbox, shower had no walls, the living room was full of cables sticking out of the walls where lights should be, etc. I went twice to see that place that's how much I loved it, and I told the landlord I'd be willing to finish the place if we split the cost between. We sign a deal that I pay for the renovation out of my own pocket, and she'll pay half of it by lowering her price for the next three years. If she'd break the contract before three years she would have to give my money back. I thought it was very clever and just deal. Landlord gets their apartement done, a tenant that will stay there for long time, and everyone will be happy. Instead she thought about it for a while and told me "look, the offer was for 4k, if we go your way I'd have to lower the price by 300, that means I'd be only getting like 500 above what I'm paying for mortgage, and that's not enough for me". You may say that's an anecdote about stupid landlord/tenant but I've been renting a lot and I've seen that sentiment a lot: I've bought this place so I could rent it for profit and if I have to pay the mortgage that means I'm losing money. Which is stupid, because at the end of the day she'll pay the morgage and can sell the whole thing. |