Before the financial crisis those who were looking for an apartment were more likely to choose buying over renting, thus the rate of owners increased on the market. But after the property prices decreased it’s more difficult to decide which is better: to rent or to buy. Real estate agency Otthon Centrum examined the financial aspects of the mentioned two 2 alternatives.
It’s not easy to decide which is better, to rent or to buy, when we are looking for a new apartment. Both have advantages, and the decision is more difficult than it was before the financial crisis. Before the crisis those who were looking for a new home preferred buying over renting; thus the rate of owners increased on the market. But then property prices started to decrease, and the monthly payment rate of foreign currency mortgage loans increased more and more. Real estate agency Otthon Centrum (Home Centre) examined the financial aspects of buying and renting. Although the increase or decrease of property prices and loan interests can’t be predicted, buying still seems to be a better solution.
The Decision Depends on the Property Prices and the Interests
Lot of people decide to choose buying over renting, because they think it’s better to pay mortgage than to pay rent; and paying mortgage also means after a while the apartment finally will be theirs. But if we have the whole amount of money we need to buy an apartment, so we don’t have to take a mortgage, renting can be a better decision. If we invest the money instead of buying an apartment, and we get an interest higher than an annual 6-7 percent, we can pay the rent from that, and keep the assets. But we can’t ignore the increase of property prices and inflation when we make a decision. Renting is better only if property prices don’t increase remarkably in the next 5 years. If the increase reaches the rate of inflation, buying is better. If we have to take a mortgage, we can decide if we want to buy an apartment, or invest the money, and rent one. It also depends on the increase or decrease of property prices and loan interests which is the better decision. If the annual increase rate of property prices is higher than 1.1 percent, it’s better to buy; and if it’s lower, it’s better to rent.
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