the dilemma of wanting to live in the same place for a long time


The housing market continues to corner the tenant throughout the country. The XXXVIII Joint Report of the Pompeu Fabra University and Tecnocasa reports that the rent has already risen so much that if we wanted to live like this for 25 years, we would pay a lot more of rent than of mortgage payment during that period.

In the short term this relationship may vary, in fact with the rise in rates caused by the Euribor and the ECB It is likely that said mortgage payment could exceed that of the rental, but if we draw a horizon of 25 years, installed in the same home that is estimated at around €250,000, the balance clearly falls in favor of buying and selling over renting.

According to the model proposed in the report, a home worth 250,000 euros could be acquired by requesting a mortgage of 200,000 euros, or by paying a average income of 900 euros as a tenant. In the one-year comparison, the rent wins, because the average payment for a fixed-rate mortgage with the conditions currently offered would be 1,056 euros, about 150 euros per month above the lease.

We advance with this model to the end, 25 years later the mortgagee has repaid the 200,000 euros and has paid another 116,702 euros in interest, a total of 316,702 euros divided into monthly installments. On the other hand, that rented home, with an initial rent of 900 euros/month, and increasing in line with the CPI, would total €359,496 over all that time. In total, the renter would pay about 43,000 euros more and would not obtain a capital gain, that is, a house.

The model is conservative, if we consider that the home is located in a medium-sized city, in which the housing supply is small and inelastic, with little capacity to grow in a short time. That is to say, the most likely thing is that, over the years, a purchased home will appreciate in value, while a rented home will see its rental rate increase more than the CPI, and therefore the difference at 25 years in favor of the sale even bigger.

In the model we must also consider that for a home like this the buyer must have €50,000 saved to finance at least 20% of the value of the property that the mortgage does not cover, unless it is a home with a price of 200,000 euros to which a 100% mortgage has been granted thanks to the ICO guarantees that the Government approved this Tuesday.

You must also take into account the expenses and taxes involved in the sale and mortgage, which must be paid without the option of financing, and which could mean an added €30,000. Everything adds up to the dilemma posed by the buying and selling market, with many edges and where today the economic resources of families are more important than the lifestyle they have.

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