Buying becomes more expensive than renting

Home buyers for the first time in a long time again have to pay more than for comparable rental accommodation.

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This trend reversal is due to the recent high interest rate increases for fixed mortgages and is expected to continue.

For the first time in 13 years, the total costs for owned accommodation when taking out or extending a mortgage exceed the rental costs for a comparable apartment.

In the first quarter of 2022, owners had to pay a 3.1% premium for owned accommodation. At the start of 2021, they could still enjoy an average property discount of 15.5%. This sharp reversal in trend is the result of the massive rise in fixed mortgage interest rates. The 5-year fixed-rate mortgage has climbed since 2021 from 1.1% to almost 2% at the end of the first quarter of 2022 (fig. 2). Combined with the steep price increases, this has resulted in the ownership discount becoming an ownership premium within just a few quarters. Buyers who decide on a SARON mortgage, on the other hand, continue to benefit from a property discount.

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