Financial news: When inflation meets head-on with renters
I will just let the situation do the talking
I feel the pain as I read this article in nst.com.my Argentina contends with inflation topping 100 percent year-on-year. A couple says in the article shared that they used to use half of their income on rent but totday, even with 70 percent of their income, they are unable to rent anything.
“This is the worst housing crisis in 30 years,” said Gabriel Mraida, president of the Buenos Aires municipality’s Institute of Housing. According to income tax data “there are some 70,000 registered rental housing units in the city, but… about 500,000 households are tenants, just to give you an idea” of the scale of informal rental, he told AFP. Do read the full article with a lot more stories here: article in nst.com.my
Homeowners usually have a better choice
Laws can be passed to limit the rental increase. I just have no idea if laws can be passed to force homeowners to rent out their units compulsorily. I think it will be tough. Homeowners cannot be forced to sell at a price determined by the government. (except for some countries where the flat you bought was from the government in the first place). Homeowners can keep their units empty and renters would have far fewer choices to rent.
Renters also have great powers too
If there’s an oversupply, renters could threaten to move and the homeowner would have to reduce the rental in order to keep the tenant. My friend’s unit nearby KLCC had to do that. Renters could also move here and there to enjoy different units, different locations, different vibes etc too. They do not need to be attached to one unit, one place, one location. Renters also save on all those headaches of maintaining the unit, of paying statutory bills etc etc.
Oversupply versus undersupply of properties
The market is not perfect. In other words, there’s no way that demand will be equal to supply. What usually happens is that demand moves up first, then prices start moving up. Supply will start to follow because developers could see many wanted to buy and they will do their best to quickly build more and more and more. One day, there will just be too many units and prices would have to drop, rentals would have to drop, correct?
Unfortunately, market is not perfect. Prices would drop for NOT LOVED areas, NOT LOVED units. In other words, the supply of these units are no longer considered at all in the market because technically very few renters wanted them in the first place. The ones which everyone wants to rent? Unfortunately, the supply is usually lower. Prices would then move up and people would pay higher rental for it. Please do not rely on the perfect demand and supply scenari yeah. It seldom happens.
Happy hunting for an amazing rental property.
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