Lack of housing is a problem worldwide.
And accommodation is growing more and more unaffordable –
especially in cities.
Why are so many countries experiencing similar problems?
“There’s a huge influx of people coming to Germany.
The population has risen from some 80 million to over 84 million.”
"In the housing market in the US, we have undersupplied.
We have not built enough new homes.”
“We still have a housing shortage of close to 2 million, in only metro cities.”
People often flock to cities in search of work – especially in
industrialized nations like Germany and the US.
In the US, over 83 percent of the population lives in cities.
In Germany, it’s close to 78 percent, and in India
it’s just under 37 percent.
Yet the number of urban dwellers continues to rise.
And this trend keeps driving up housing prices worldwide –
regardless of whether people rent or buy.
Compared to household incomes, property prices
have risen disproportionately.
Until 2015, India saw the biggest increase,
but then prices started soaring
in the US and Germany, too.
"India is still a growing economy, a growing country.
And since you have this natural tendency of buying a house,
because it is set in our pattern.”
In the US, many people still dream of owning their own home.
But young people are having a tougher time
making this dream a reality.
“In these more expensive markets, it takes more than 10 years,
even 20 years to save for a down payment.
So it may be really, really challenging.”
In 2007 the US real estate bubble burst, triggering a global financial crisis.
Now most homebuyers have to make a 20 percent down payment.
It’s the biggest hurdle in Germany, too.
“For many, the greatest challenge is actually coming up with
the necessary down payment.
And the percentage required in Germany is very high
compared to other countries.
Unfortunately, we’re the European leader
when it comes to these costs, too.”
“For those that are lucky enough to have parents
who can help them, they are able to enter home ownership.
But for others, it takes a really, really long time to save for a down payment.”
So maybe rent rather than buy after all?
Renting is popular in Germany: More than half the population
lives in rental apartments.
In the US, just one third are renters.
While in India, renting is even less common.
“Well at this point, it is cheaper to rent.
Many measures when you compare mortgage payments,
including the high mortgage rates, are much more expensive
than renting. Basically for younger households, it is easier
right now to find cheaper rent than to buy a home.”
In Germany, renters enjoy many protections,
which also explains why renting is so popular here.
“We have a highly regulated rental market that for many years
kept rents artificially low and made renting cheaper
compared to buying property.”
But rents are rising here, too – especially in cities
that lack space for new construction.
And developers are put off by all the red tape.
Still, renting can pay off -- in India, as well.
"When you're starting a career, it is always better to rent
because you are not settled in a career.
You are still kind of exploring where you have to settle down.
You're also exploring your career opportunities.
So that's where you are more mobile.
You are, you know, and also you don't have enough money to make
the down payment and purchase a house.
So, at this juncture of a career, it is not advisable to lock in
your capital in an asset which is highly illiquid or let's say
immovable."
And there's no relief in sight on the global housing market.
It’s the same the world over:
Only once more apartment buildings go up
will prices start to come down.