Since we're talking real estate...
I've been thinking about whether buying makes sense vs. renting here in Finland at the moment. One reason I'm doubtful is demographics. When my parents were born, the fertility rate was around 3 children per person, when I was born, it was just above 1.6. In brief, the population is getting old, and my parent's generation seems to me to have been much more eager to buy real estate than their children have been. It's a bit of a morbid calculation to make, but in 20 years time, the generation with the greatest accumulated wealth, including real estate, will largely have died and passed their property on to their children, who are fewer in number. So it seems to make sense to expect housing prices to go down quite a bit by 2030 or so.
The question is, how low will they go? And will they go down everywhere? Cities are growing rapidly here, with real estate valuations showing the expected increase. This trend may well continue regardless of demographic changes.
Currently, in central Helsinki, a 50 sqm apartment seems to rent for 1,100 EUR / month, and can be bought for, roughly, 280,000 EUR. These are rough estimates, and even owning an apartment, you're still looking at close to 200 EUR / month in fees. So calculating from this, and not taking into account future price movements which I have no way of predicting, for the investment it takes to buy an apartment in Helsinki at the moment, you can rent the same apartment for about 26 years. If you expect prices to keep going up, the calculations look different of course. Still, if I had a bit under 300k EUR to invest in something, I'm really not at all convinced buying myself a place to live would be the best option. I'd guess the effects of this demographic change will start showing in 15 years or so, still a decade away from the equilibrium point of buying vs. renting. If houses go down low enough, renting looks like a pretty good idea to me.
edit:
I'll just leave this here:
"Percentage of the population over 65 in Europe"
Poll
