hit tracker
Tuesday, June 18, 2024
HomeLatest NewsBuy or rent a home, what is recommended with current prices?

Buy or rent a home, what is recommended with current prices?

Date: June 18, 2024 Time: 11:24:47

In Spain, housing has become a problem for many tenants due to the increase in prices. Both the cost of buying and renting have increased. In the first case, the average assessed price of free housing increased by 3.1% in the first quarter of the year, the highest figure since the last quarter of 2010, according to data from the Ministry of Transport, Mobility and Urban Agenda ( Mitma) . In addition, the data from Fotocasa indicate that the price of second-hand housing suffered a year-on-year increase of 10.2%.

When buying a home, it must also be taken into account that its financial outlay forces many to resort to a mortgage to finance the purchase. Currently, the rise in interest rates driven by the European Central Bank has increased the cost of financing. Financial institutions have increased the rates of both fixed and variable rate mortgages. The Euribor, the main reference index for variable mortgages, surpassed the 4% barrier this Friday for the first time since November 2008.

This situation complicates purchasing power. And to this is added the drop in the savings rate and economic instability, with a decline in the granting of mortgages by banks. The alternative is renting, but the upward trend is also repeated in its prices. In the last 10 years, since 2012, the price of rental housing has skyrocketed by 51.4%, according to data from Fotocasa. Specifically, last year the rental price rose by 7.4%.

What decision to make to buy or rent a home?

Given this context, the decision to buy or rent a home with the aim of saving money is not easy. Gonzalo Ortega, ‘partner’ of Axis Corporate, explains that the decision “will depend on the ability to pay and the need for flexibility of each individual when changing residence, leaving profitability in the background”.

But, in general, Ortega points out that, for “profiles with advanced investment knowledge”, it may be attractive to bet on renting their habitual residence instead of buying it. He points out flexibility as advantages and that with the capital invested “they can obtain higher returns on other investments by discounting the costs of the mortgage, as long as the financial markets accompany them.”

housing as investment

Beyond housing as a habitual residence, houses are also an investment with which to obtain profitability. In this sense, Gerardo Ortega points out that “investment in housing continues to be a stable value, especially in the main population centers where the shortage of rental supply continues and the value of the asset continues to grow, with average returns of more than 7%. “. For this reason, he believes that, in an environment of “uncertainty” in the financial markets, it is a “very attractive long-term” investment. However, he points out that it is an “unliquid” investment and believes that “it is not exempt from certain risk due to the possible non-payment of rents and the new Housing Law.”

Regarding the price of housing, the Bank of Spain has announced this week that it will be difficult for it to fall due to the shortage of new construction and the increase in the cost of construction materials. According to a report published this Tuesday, one of the main drivers of the housing market since the pandemic were national buyers, many with pre-existing assets “of a certain entity” who do not finance a very high part of the purchase cost with credit. of the house.

The characteristics of these buyers, who have been affected to a lesser extent by macroeconomic conditions, are partly mitigating the downward trend in house prices, which according to the Bank of Spain show “downward resistance”. greater than other variables such as the number of sales or visas to build.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
RELATED ARTICLES

Most Popular

Recent Comments