All is not as it seems. The prices have actually increased significantly, the graph fails to show that because in the past a large number of rents were declared to be lower to the tax authorities and the rest was paid in cash (and undeclared) to the owner. Same for owning, the declared value was much lower vs what was actually paid to the seller.
Rents are at least x2 now
It has nothing to do with Greek economy going down the drain. Just that more and more of the rent, percentage-wise, is paid in cash to evade taxes.
Same place that went for 300-350€ monthly in 2010, now goes for 550-600€, having an increase of 75-100%. It’s just that from 350€ the 250€ were declared, and now from the 600€ the 200€ are declared.
Same goes for buying property.
Since I was young, I've always seen real estate market as some kind of scam. 30 year old mortgages, artificial shortages, NIMBYs and subprime crisis make it seems like a terrible way to deal with shortages of housing, yet people keep paying more and more. 20% down payment is not easily achievable by young people without help from their parents which makes it almost like a luxury item in this day and age. I don't know if I'm correct in seeing it this way but simple housing should not be such a issue in 21st century.
Portugal's increase seems slightly low, likely because the prices feel due to a severe recession in 2011 to 2012, and probably 2013 too. It's after that that the prices started ramping up rapidly. There've also been steps to remodel the vast old unused stock of housing, but the majority of it is still behind red tape, I believe.
It's also interesting how the prices barely rose in Spain during that period, so they clearly fell in inflation-adjusted terms. Did the real estate glut from the 1990s and 2000s help keep them down? If so, it seems like it wasn't entirely for naught.
It's because they are limited by very different things. Rent-price increases are limited by how much money tenants make per month. Buying-price increases are limited by how much banks are willing to lend.
Doubling rent might mean the rent goes well over the average renter's income. That's obviously not possible.
I don't think that's true. The higher the rent, the closer it's to the monthly payment to a bank to return your mortgage and vise versa.
That's why you have indices like
https://www.investopedia.com/terms/p/price-to-rent-ratio.asp.
Rent can go over average renter income. See Hong Kong for example. They split appartment to smaller and smaller ones and people just forced to live with other people in the same flat, and you live further and further from the center.
They are, to some extent. People either buy homes or rent them. Buying is long term involvement (with banks), rent is not. Buying makes price fluctuation more solid, and it is related to peoples' income + banks' willingness to offer credits. Renting is rather related to offer and demand, and can fluctuate a lot from city to city according to local developments (a big company in tech or IT will offer big salaries => renting price will go up). Or some external events, like the influx of Ukrainians which made rent prices go up 2-3x in some places.
My understanding is that it should be related but from the chart in some countries cost of ownership grew several times faster than rent. That's weird. Maybe they have some governmental programs to help renters, or there is a huge housing bubble.
The graph showing greece rents is probably made from Ursulas von der Leyen(Mitsotakis best mafia assosiated) cousin. You will have to pay 600-700 for a descent place to live with 2 bedrooms and i am not talking about Athens(it's worse).
Idk about Hungary, Latvia or Estonia, but we here in Lithuania have quite a bit of Ukrainians and Belarusians coming in - while Ukrainians vary widely in terms of purchasing power, the Belarusians who come here mostly aren't exactly of the poor kind, they generally work in IT, meaning they earn quite a bit, which in turn affects the rent prices (they need to live somewhere and they ain't buying no flats or houses)
Maan, I wish I lived in Greece and owned property in Estonia. Is be the perfect slumlord, renting from a beach in Greece.
All is not as it seems. The prices have actually increased significantly, the graph fails to show that because in the past a large number of rents were declared to be lower to the tax authorities and the rest was paid in cash (and undeclared) to the owner. Same for owning, the declared value was much lower vs what was actually paid to the seller. Rents are at least x2 now
As an Estonian who bought an apartment in 2020, watching the prices rise so sharply while I was still saving up for the down payment was depressing...
The graph for Greece is a joke. There is at least a 100% increase in rent prices, but a big percentage of that rent is paid in cash to evade taxes
Greece should share its secrets.
Has absolutely nothing to do with their economic depression in late 2000s-early 2010s and the weak recovery for the rest of the decade.
Their secrets are that their economy has rapidly gone down the drain. Estonia is at the top because their citizens have gotten a lot richer.
It has nothing to do with Greek economy going down the drain. Just that more and more of the rent, percentage-wise, is paid in cash to evade taxes. Same place that went for 300-350€ monthly in 2010, now goes for 550-600€, having an increase of 75-100%. It’s just that from 350€ the 250€ were declared, and now from the 600€ the 200€ are declared. Same goes for buying property.
Since I was young, I've always seen real estate market as some kind of scam. 30 year old mortgages, artificial shortages, NIMBYs and subprime crisis make it seems like a terrible way to deal with shortages of housing, yet people keep paying more and more. 20% down payment is not easily achievable by young people without help from their parents which makes it almost like a luxury item in this day and age. I don't know if I'm correct in seeing it this way but simple housing should not be such a issue in 21st century.
Off to greece then!
Portugal's increase seems slightly low, likely because the prices feel due to a severe recession in 2011 to 2012, and probably 2013 too. It's after that that the prices started ramping up rapidly. There've also been steps to remodel the vast old unused stock of housing, but the majority of it is still behind red tape, I believe. It's also interesting how the prices barely rose in Spain during that period, so they clearly fell in inflation-adjusted terms. Did the real estate glut from the 1990s and 2000s help keep them down? If so, it seems like it wasn't entirely for naught.
Can someone explain why there is such a huge difference between changes oft prices for rent and buying? Shouldn't these prices be strongly correlated?
It's because they are limited by very different things. Rent-price increases are limited by how much money tenants make per month. Buying-price increases are limited by how much banks are willing to lend. Doubling rent might mean the rent goes well over the average renter's income. That's obviously not possible.
I don't think that's true. The higher the rent, the closer it's to the monthly payment to a bank to return your mortgage and vise versa. That's why you have indices like https://www.investopedia.com/terms/p/price-to-rent-ratio.asp. Rent can go over average renter income. See Hong Kong for example. They split appartment to smaller and smaller ones and people just forced to live with other people in the same flat, and you live further and further from the center.
They are, to some extent. People either buy homes or rent them. Buying is long term involvement (with banks), rent is not. Buying makes price fluctuation more solid, and it is related to peoples' income + banks' willingness to offer credits. Renting is rather related to offer and demand, and can fluctuate a lot from city to city according to local developments (a big company in tech or IT will offer big salaries => renting price will go up). Or some external events, like the influx of Ukrainians which made rent prices go up 2-3x in some places.
My understanding is that it should be related but from the chart in some countries cost of ownership grew several times faster than rent. That's weird. Maybe they have some governmental programs to help renters, or there is a huge housing bubble.
The graph showing greece rents is probably made from Ursulas von der Leyen(Mitsotakis best mafia assosiated) cousin. You will have to pay 600-700 for a descent place to live with 2 bedrooms and i am not talking about Athens(it's worse).
In Croatia there's difference near 100% in house price since 2010, and rents follow that
"But immigrants are the cause for the housing crisis!" Many immigrants coming to the Baltics and Hungary, eh?
Idk about Hungary, Latvia or Estonia, but we here in Lithuania have quite a bit of Ukrainians and Belarusians coming in - while Ukrainians vary widely in terms of purchasing power, the Belarusians who come here mostly aren't exactly of the poor kind, they generally work in IT, meaning they earn quite a bit, which in turn affects the rent prices (they need to live somewhere and they ain't buying no flats or houses)