Will house prices fall if the next generation prefer to rent?Make Text Bigger
The Bear was arguing “Younger peoples desire to spend money on consumption, travel and lifestyle and rent rather than home purchase should theoretically lead to lower prices”.
The Bear also went on to say, I cannot see house price growth over salary inflation. All the factors that simulate higher prices such as interest rates falling from 10% + in the 1970’s to 5% or less today , strict planning conditions , high immigration , high desirability of ownership , high LTV (loan to value) mortgages are reversing to some degree. Thus, a far lower rate of increase would be expected as affordability will be reduced.”
The Bull’s argument was “the fact that the same folks who might have purchased will turn into renters is going to create a floor in house prices. The demand to live will not go down just because the demand to be an owner occupant falls. Home ownership was below 50% back about 50 years ago. The country still ticked over and for many it was doing just fine. If less than 50% were owners, someone else (government or private) owned the housing stock. As the government can not afford to own the housing stock at this point, the private market will largely step in if rental income is there.”
What’s your view?
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