(14g) House prices continue to rise (too much)


As was predictable (and as I wrote about before, see here) houses become much too expensive so that people, in order to be able to buy a house, need to take ever higher mortgages that with ordinary salaries need to be repaid over ever longer periods and now for a growing number of people well into their retirement. A house, ones regarded as a good investment for later, now seems to become a burden for many.

I think people should stop buying houses to force a correction or prices may continue to increase until a new crisis may hit and those who bought now will impoverish. Yes, after the financial crisis that was a result of among others inflated house prices whereby too many people were no longer able to repay, some people warned against uncontrolled housing markets but it may all repeat itself. And, even as an investment, when houses become too expensive, also the rent will go up and more difficult to let. Only those who bought long ago may not suffer if prices go down although they will calculate their losses compared with when prices where higher while they forget that when they sell their house, they can still buy another that also became cheaper.

And although people tell me I exaggerate and thus, yes they can proof me wrong, I believe we need control mechanisms that prevent house prices rise too much, including mechanisms to prevent that the price of a few house increase too much so they become unaffordable for many and may result in areas exclusive for the wealthy or abandoned. Because it's unhealthy when an upwards cycle of ever more expensive houses starts spinning as in the end most people loose, even those who consider themselves rich but got a loan to buy when people can no longer pay rent. Only the very rich who didn't need loans to buy may still be able to let houses at reduced prices without having to bother with the need to repay loans; still, this will affect their own businesses.

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