Finding an apartment in many big cities is a matter of luck. Rents are rising everywhere, but so are property prices. So should you rent or buy? We took a look at Germany, the US and India.
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00:00 Lack of housing is a problem worldwide, and accommodation is growing more and more unaffordable,
00:06 especially in cities.
00:08 Why are so many countries experiencing similar problems?
00:12 There's a huge influx of people coming to Germany.
00:15 The population has risen from 80 million to over 84 million.
00:19 In the housing market in the US, we have undersupplied.
00:21 We have not built enough new homes.
00:24 We still have a housing shortage of close to two million in only metro cities.
00:31 People often flock to cities in search of work, especially industrialized nations like
00:36 Germany and the US.
00:38 In the US, over 83% of the population lives in cities.
00:43 In Germany, it's close to 78%, and in India, it's just under 37%.
00:49 Yet the number of urban dwellers continues to rise, and this trend keeps driving up housing
00:55 prices worldwide, regardless of whether people rent or buy.
00:59 Compared to household incomes, property prices have risen disproportionately.
01:04 Until 2015, India saw the biggest increase, but then prices started soaring in the US
01:11 and Germany too.
01:13 India is still a growing economy, growing country.
01:16 And you know, since you have this natural tendency of buying a house because it is set
01:21 in a pattern.
01:24 In the US, many people still dream of owning their own home.
01:31 But young people are having a tougher time making this dream a reality.
01:37 In these more expensive markets, it takes more than 10 years, you know, even 20 years
01:41 to save for a down payment.
01:43 So it may be really, really challenging.
01:46 In 2007, the US real estate bubble burst, triggering a global financial crisis.
01:52 Now most homebuyers have to make a 20% down payment.
01:55 It's the biggest hurdle in Germany too.
02:00 For many, the greatest challenge is actually coming up with the necessary down payment,
02:04 and the percentage required in Germany is very high compared to other countries.
02:09 Unfortunately, we're the European leader when it comes to these costs too.
02:19 For those that are lucky enough to have parents who can help them, they are able to enter
02:23 home ownership.
02:24 But for others, it takes a really, really long time to save for a down payment.
02:30 So maybe rent rather than buy after all?
02:34 Renting is popular in Germany.
02:36 More than half the population lives in rental apartments.
02:39 In the US, just one third are renters.
02:43 While in India, renting is even less common.
02:46 Well, at this point, it is cheaper to rent.
02:50 You know, many measures when you compare mortgage payments, including the high mortgage rates,
02:56 are much more expensive than renting.
03:00 Basically, for younger households, it is easier right now to find cheaper rent than to buy
03:08 a home.
03:09 In Germany, renters enjoy many protections, which also explains why renting is so popular
03:14 here.
03:15 We have a highly regulated rental market that for many years kept rents artificially low
03:24 and made renting cheaper compared to buying property.
03:31 But rents are rising here too, especially in cities that lack space for new construction.
03:37 And developers are put off by all the red tape.
03:41 Still renting can pay off in India as well.
03:44 When you are starting a career, it is always better to rent out.
03:48 Because you are not settled in your career, you are still kind of exploring where you
03:52 have to settle down, you are also exploring your career opportunities.
03:56 So that's where you are more mobile.
03:59 And also, you don't have enough money to make the down payment and purchase a house.
04:04 So at this juncture of your career, it is not advisable to lock in your capital in an
04:09 asset which is highly illiquid or let's say immovable.
04:14 And there's no relief in sight on the global housing market.
04:19 It's the same the world over.
04:24 Only once more apartment buildings go up, will prices start to come down.
04:29 [MUSIC PLAYING]