San Diego/Berkeley – In times of high inflation, real estate is in high demand, according to researchers from the Rady School of Management University of CaliforniaSan Diego (UCSD) and the UC Berkeley prove. “We believe people are choosing to buy over rent in this situation because they are concerned about future inflation, which can push up both rent and house prices. That’s especially true if they can fund their purchase with a fixed-rate mortgage that protects them from future inflation,” says UCSD economist Alex Steiny Wellsjo.
700 homeowners interviewed
To find out how people make home ownership decisions, UC Berkeley’s Wellsjo and co-author Ulrike Malmendier surveyed 700 homeowners in Austria, Germany, Ireland, Italy, Portugal and Spain about good reasons for buying a home, whether they have personally experienced high inflation, whether they are concerned about future inflation and whether inflation has influenced their own purchasing decisions.
50 percent think that “real estate is a good investment when there is inflation”. 21 percent of people who have experienced high inflation are more worried about future inflation, and 74 percent think inflation has influenced their decision to buy a home.
The authors also used data from the Household Finance and Consumption Survey European Central Bank used by 220,000 households in 22 European countries. These show that inflation has a big impact. For example, an increase in the inflation rate from 2 to 5.4 percent would increase the proportion of those who want to own a property – from 65 to 75 percent.
Lithuania, Slovakia and Croatia
That households in different countries have experienced episodes of higher or lower inflation in the past may help explain differences in home ownership rates. In Germany and Austria, for example, less than half of households own their own home.
But in Lithuania, Slovakia and Croatia, countries that have had high inflation in the past, 85 percent or more of citizens own their homes. In France, which offers more price stability, it is only 57 percent. However, in neighboring Spain, a country with a long history of inflation, the figure is 82 percent.
Those: www.pressetext.com
(pte002/14.04.2023/06:05)
