When everyone wants to rent instead of buying, what happens to the property market?
Wondering what will happen to the property market if it’s true that most people prefers to rent?
First thing is, demand for property will not be reduced. It will stay the same yeah. People renting meant people still need a place to rent. No one is saying that everyone likes to live under the bridge or along the walkway yeah. They say they need a place to rent…
It’s cleverer to look into how many people will be moving to the bigger cities; urbanisation and also intending to rent instead. Not everyone will prefer to rent the whole place because they may have budget concerns. So, we can always assume that every property may be rented out to three person instead. In other words, look at the new migration numbers into a city, divide by 3 and you will get an idea about the number of properties which will be needed.
Opportunities to buy if everyone prefers to rent
If everyone wants to rent, it meant that the opportunity to buy a property and rent it out to them is now widened. Instead of buying the overly expensive property, we can buy a decent sized one with 3 rooms and rent each room out separately. There’s also that opportunity to cater to another market; people who’s willing to rent a small room with just a bed instead.
So, the same property could then be rented to double or triple the number of people depending on the size and layout of the property. Just remember, the hassle of renting to ever more tenants will be bigger versus renting to just a couple for example.
If everyone prefers to rent, property developers still have to build yeah
Without an increasing number of new property supply, it will mean that as demand for rental property will start to push property prices up because of the limited supply of property versus the ever increasing demand for properties to rent. This is also the reason why in many advanced property markets, the tenants are always facing ever higher rents because the landlord could rent out their units at a higher price every year.
That’s a very sad story and yes, it happens. So, property developers must continue to build the type of properties which the buyer could buy so that they can continue renting out the unit.
The below poster tells why more people will continue to move to cities
Growth is slow at just 1.3% but… demand will continue.
The below poster says it all…
Happy deciding and yes, when everyone wants to rent, then I am the someone who prefers to buy instead.
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