This is nuts. Housing inflation is rampant, I live in Sweden and my house value increased 40% in 5 years. We currently pay less per month for our 250 m2 house than my parents pay for their 75 m2 rental apartment.
Loans above 70% of value needs to be amortized by 2% per year.
Loans above 50% of value needs to be amortized by 1% per year.
If your house loan is more than 4.5 times your yearly income, regardless of the percentage, then you need to amortize another 1% per year until below it.
This has of course made it even harder for young people to enter the market, but it seems to make for an overall more healthy long-term market in the current debt climate.
For many the hardest part is the by law required 15% down payment, this can be financed by private loans but that comes with it's own catches. Many instead end up relying on parents who has ridden the wave taking out a loan on their home, if you are fortunate enough to have home owning parents.
Case in point: I moved to Finland as an immigrant 9 years ago, with nothing but a backpack, girlfriend and $12k in my bank account. Within 7 years, we paid down the mortgage for 100 m2 house in the capital area, while raising two children, with one above average and one below average income. And I don't feel like we were materially deprived in any way.
I think the main culprit is couples settling down way too late in their lives. Instead of settling down at the age of ~25 and combining two incomes to pay off the mortgage principle, we have two adults, each paying ~$700/month rents. When they finally move together at the age of ~30, that's almost $100k that went down the drain. The baby-boomer generation used to move together at even earlier ages, 19-22.
But anyway, the rent I spent on various 'student' housing over the years does add up to a quarter of the value of my current house. In retrospect, I should've bought a cheap apartment ten years ago.
I was asking about doing the same thing in the real estate market of today, not the one from 9 years ago.
The problem for young people wanting to but a house, at least in Sweden, isn't so much the monthly costs of paying the mortgage (which is often less than rent), but being able to put up the 15-20% 'cash' that the bank wants to see to even give you that mortgage.
Interest rates going down doesn't magically push prices up. Prices go up because the interest rates reducing is reducing monthly costs, which makes a euro of housing more affordable and thereby allowing you to bid more for it in the marketplace.