Friday, 21 December 2007
Home Ownership Still Cheaper Than Renting, Is It?
"Owning one's residence continues to be a cheaper alternative than renting, reports the daily Helsingin Sanomat." By the way large income from Helsingin Sanomat is coming from advertisement i.e real estate company. Among that, they own the popular oikotie, a web site that charges property sellers a fee for advertising their flat for sale...So maybe they are now seeing a loss in revenue thus a campaign of deception and disinformation.
"The report quotes the Pellervo Economic Research institute PTT to the effect that the total costs of living in a self-owned residence are only about 60% of the expenses of a rental."
PTT, there are the same guys who said that in 2000 there was no overheating ... So those always appear on the screen when things are on fire... :
In October 2000, Vesa Vihriälä, heads the Pellervo Economic Research Institute (PTT) in an article published by Helsingin Sanomat was saying :"Perhaps this will still the cries of overheating that we have been hearing for three straight summers. Personally I still do not regard the economy as in an overheated state".
Reference: "Recession time again, or not? The experts don't believe it's coming quite yet"
"During the late 1980s and early 1990s, the opposite was true. At that time, it made more economic sense to rent. However, since the mid-1990s ownership has been less expensive."
"The paper says that if rents continue their upward trend, home ownership will become increasing attractive. On the other hand, high purchase prices, especially in the capital area are a barrier to ownership for many people."
Don't be fooled by those kind of article. Those have always self interest and don't care putting people into trouble. See as well another post for those "Economists comments"
Now property prices are very expensive (see how far price have risen in 10 years) and prices are declining (3%) at a time of economic uncertainty. My advise is to wait and see. Remember a 10% drop on a 200000 euro property is 20000 euro saved which will cover the rent for at least 1 to 2 years. So you have time to evaluate the market direction and time to find the right property. Making decision in hurry increase the probability of mistakes.
The professional investors are usually smart and informed. Just have a look to the property companies (see previous post, and in particular YIT), they have shed 50% of their value in just 6 months...So Professional investors understand that investing in property is not good for the next year or more...
Source : YLE