Owning a House?
96% of Romanians own their homes, while Austria’s and Germany’s rate ranks the lowest in the EU (see chart) only the swiss rent even more.
Why is this figure so high in ‘poor’ countries and so low in ‘rich’ states?
The basic need of humans for shelter is the same all over the world, the differences in homeownership have other reasons:
- You know better than I, that the mass privatization in the early 1990s of state owned homes at low prices, or for free, is the basic reason for the high rate of ownership in Romania.
- But the much stronger desire of Romanians to own their home than in western european countries, was one of the first differences I noticed here.
- The restitution law – actually the incomprehensible implementation – may have contributed to an even greater urge to own a house in Romania. The following real-estate boom and subsequent crash were only a mirror of that desire.
- Whereas in western europe, a little more responsible lending by banks and a much better legal protection for tenants contributed to the relatively low ownership of homes.
I’d like to stress something else.
It may sound paradox, but there are facts, that a small ownership figure and a large rental population is better for the development of a country – and renting can be better for you personal financial well-being.
- It increases not only labor mobility but also encourages strong competition between cities. If one city improves over another, tenants can move to enjoy the benefits more quickly than owner-occupiers.
- When tax revenue is determined locally (as it is for income in Switzerland) that attracts the most residents will also gain the most revenue. Thus every city has a financial incentive to improve itself, instead of merely a political incentive. The results speak for themselves: Swiss, German, and Austrian cities regularly top Mercer’s Quality of Living Survey.
- In today’s economy, many people struggle to make ends meet. By renting, you have the option to downgrade into a more affordable living space at the end of their lease. When you are a homeowner, it is much more difficult to break free of an expensive house because of the fees involved with buying and selling.
- A recent study showed, that about 40 million US-households, or more than half of current homeowners, would have actually been better off financially by renting and investing during the particular period in which they bought. This is according to HelloWallet, a workforce optimization and research firm.
Before you sign for a binding 30-year mortgage, why don’t you consider to rent (and invest) a few years first. Invest clever and wait patiently for the next downturn in housing prices – then you may cancel the renting -contract to become a proud proprietar.
In ‘poor’ EU- countries, the house ownership is higher than in rich countries.