Reasons for Decline in Ownership of housesin Major World Economies!
Real estate prices have been on an all-time high. Real estate properties have never shown a major dip in their market value. Owning a house has always been a defining step in a person’s social progress. But recent studies point towards reducing numbers in house ownership. Studies have calculated that house prices have risen by 10% from the last year. That means anybody born after the year 1985 will find it 10% harder to buy a house.
Why are house ownerships declining in United Kingdom and United States of America?
1. With the past recession and other economic breakdowns young people who have just started earning do not want to take risks of mortgage and loans.
2. With the decrease in mortgage rate, many people started buying houses not for living but just for investment purposes.
3. This led to empty homes but increase in property prices.
4. The most easier solution of building more homes does not work and all major cities are facing empty built properties.
5. Unpredictable economic conditions also cause it a bit risky to buy house.
6. Jobs are also not stable. Many people keep changing their jobs every few years or in some conditions even in few months.
7. This also leads to frequent change of locations which makes owning a house not feasible.
8. With increasing prices including property prices, the salary pattern of the middle class workmen has not substantially increased in the past 30 years or so.
9. The lending standards are growing tougher for people who want to buy houses from middle class.
10. Lack of housing construction that meets demands.
What causes rent prices to be so high?
1. There was a housing boom before the financial crisis took place.
2. During the financial crisis most of the housing projects were either left incomplete or discarded all together.
3. When the economy recovered, it turned into an acute shortage of rental properties.
4. Rentals prices are increasing rapidly.
5. Research studies a double digit increase in major economies.
6. In some cases, the rental prices are even crossing mortgage rates.
7. Even if the mortgage rates are less than rental prices an average middle class worker cannot afford a house due to exponential house prices.
8. Initially working class people used to save for mortgage rates and leave in rentals until they could afford to buy a house.
9. But with increasing prices, many people choose to extend their rental periods.
10. This does not create vacancy for new people looking for rentals.
11. This again leads to huge demand, increasing the prices for rent.
12. Additionally, with lower mortgage rates people with higher income invest in property feeding the demand which again leads to increase of their property valuation, eventually leading to rental price hike.
What are possible solutions for curbing high prices?
1. Restore the demand-supply ratio of real estate by making economic reforms.
2. Increase pay and wages accordingly.
3. These solutions are not something that an individual can do, the government has to initiate these reforms.
How to Save money for owning a new home while renting?
1. Owning a home comes with many benefits, in the present scenario of escalating prices there are still ways for an individual to gradually save for buying a new home.
2. First step is to analyse your house requirements, calculate the estimated price keeping in mind the inflation factor, research on available loans, check your eligibility and decide on a period of time required for saving he required amount.
3. You can follow the below suggestions to save and buy your dream home.
4. Stay with your parents: You can totally save on your rent, by staying with your parents until you save enough to buy your new home i.e. if your parents are comfortable with it.
5. Manage your Salary: Divide your salary in to three equal parts. One for your expenses, one for saving up for mortgage and the last part for emergency purposes. Use the emergency part only when required. At the end of every month transfer the remaining emergency fund to your savings.
6. Change your mobile plans: You can save a lot of money by changing your mobile provider to a smaller one. They normally have cheaper plans. Also with the provision of number portability, you don’t have to worry about changing numbers.
7. Use public transport: Commuting through public transport cuts down major expenses of maintain a car and fuelling it. You also have an added benefit of reducing environmental pollution. In places where public transport is not widely used one can always go for car-pooling option.
8. Get rid of your bad habits: Your bad habits are not limited to smoking and drinking, consumption of unhealthy junk food, other forms of addiction are all factors that consume your savings. Getting rid of them will also improve your health and longevity.
9. Securing a second source of income: Find a second job, start freelancing, apply for online jobs or if you are creative sell your art.
10. Reduce your rent by getting a roommate: Sharing your rental place with a roommate or roommates can potentially cut your rental costs by half or more.
11. Save on extra cash received: You might receive extra amount of many through tax refunds, bonuses, performance based hike, appraisals etc.
12. Do not go overboard on credit card expenses: Using credit card is recommended to increase credit score but misusing it will have negative impact on your credit score as well as your savings. Always pay your credit bills on time.
13. Spend wisely on Home furniture (Danetti's site) and décor: The industry of furniture and décor has undergone massive technological advancements. Choose from huge range of high performing, low cost furniture range. Opt for simple, minimal and essential furnishings especially for rentals. Buy multipurpose furniture like sofa-cum-bed, a table that can function as both study and dinner table etc.
Using the above suggestions will help a future home buyer to save adequately to invest in owning a residential property.