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Google search say that the “true” cash purchases represent 20-30% of all purchases. Add to that the people that eventually own after a mortgage ends and it stil

Google search say that the “true” cash purchases represent 20-30% of all purchases. Add to that the people that eventually own after a mortgage ends and it still may not be the most common, but it is not the small minority either.

pcrh 1y ago
People who haven't inherited wealth can slowly accumulate capital in their properties, especially if prices are rising. They can use this to part-finance further property purchases. This is the model most Anglophone countries adopt. However, what most miss in this model is that the cost of doing so is much greater than they realize. The most obvious extra cost is the interest paid on mortgages, which can amount to 2-3 times the value of the property by the time the mortgage is fully paid. A further cost is politically imposed, in that governmental policies will avoid making homes more affordable, as this is perceived as a "loss" by many mortgage-holders and home owners.
- manwe150 1y ago
  > People can slowly accumulate capital in their properties I thought this is actually one of those “myths people believe about owning real estate”. In most markets, it is a depreciating asset that takes considerable time and money to maintain at the original capital value. This is why the cost is much higher, like you said, but not exactly for the reason you said. The net present value of that added interest payment is typically very low. It is a competitive market. It is uncertain whether I’d come out ahead or behind if I pay off the mortgage on day 1 or put that equivalent lump sum in the market and use that asset to pay off the mortgage instead. The political cost isn’t merely perceived loss, that is a real loss as it should cause the sale price to reflect the actual depreciation of the asset of an pre-owned house instead of being able to claim the added value of getting ownership.
  - pcrh 1y ago
    You're correct that the calculations are a bit more complex in reality. However, in a mortgage situation, the borrower does accumulate capital, whereas in a housing association scenario the resident/renter does not. The major factor distinguishing the returns on the two options (lower rent vs mortage + depreciation) is whether the value of the property increases more than the costs of the mortgage, and what else the renter might do with their money. Note that most of the value of prime property (e.g. that in or near major cities) is in the value of the land, not the structure. So there is substantial political pressure to support land value increases, to the cost of everyone except mortgage lenders.... Further, the notion that the cheaper costs achieved by housing associations and the like, including public housing are the result of subsidies can be shown to be incorrect. They're cheaper because of the different treatment of capital.

pcrh 1y ago

People who haven't inherited wealth can slowly accumulate capital in their properties, especially if prices are rising. They can use this to part-finance further property purchases. This is the model most Anglophone countries adopt. However, what most miss in this model is that the cost of doing so is much greater than they realize. The most obvious extra cost is the interest paid on mortgages, which can amount to 2-3 times the value of the property by the time the mortgage is fully paid. A further cost is politically imposed, in that governmental policies will avoid making homes more affordable, as this is perceived as a "loss" by many mortgage-holders and home owners.

manwe150 1y ago
> People can slowly accumulate capital in their properties I thought this is actually one of those “myths people believe about owning real estate”. In most markets, it is a depreciating asset that takes considerable time and money to maintain at the original capital value. This is why the cost is much higher, like you said, but not exactly for the reason you said. The net present value of that added interest payment is typically very low. It is a competitive market. It is uncertain whether I’d come out ahead or behind if I pay off the mortgage on day 1 or put that equivalent lump sum in the market and use that asset to pay off the mortgage instead. The political cost isn’t merely perceived loss, that is a real loss as it should cause the sale price to reflect the actual depreciation of the asset of an pre-owned house instead of being able to claim the added value of getting ownership.
- pcrh 1y ago
  You're correct that the calculations are a bit more complex in reality. However, in a mortgage situation, the borrower does accumulate capital, whereas in a housing association scenario the resident/renter does not. The major factor distinguishing the returns on the two options (lower rent vs mortage + depreciation) is whether the value of the property increases more than the costs of the mortgage, and what else the renter might do with their money. Note that most of the value of prime property (e.g. that in or near major cities) is in the value of the land, not the structure. So there is substantial political pressure to support land value increases, to the cost of everyone except mortgage lenders.... Further, the notion that the cheaper costs achieved by housing associations and the like, including public housing are the result of subsidies can be shown to be incorrect. They're cheaper because of the different treatment of capital.