Why buy now when prices will be lower in six months, or a year from now.
Why develop new housing blocks (as a private developer) if it is a depreciating asset.
Why develop new housing blocks (as a private developer) if it is a depreciating asset.
To live in the house.
>Why develop new housing blocks (as a private developer) if it is a depreciating asset.
To sell to people who want to live in the house.
I’ll just rent until the price bottoms out
>To sell to people who want to live in the house.
People won’t buy and you’ll be stuck renting.
For the other 99%, time marches on - they want to have children and raise those children in a house _within a fixed timeline_. Because of time, they are unable to wait forever, so they (figuratively) put a stake in the ground and realize that a house is a home - not an investment - where they can raise a family. Since those 99% of people aren't waiting for the lowest price, housing prices don't collapse and rental prices don't skyrocket.
Rent what inventory? If everyone wants to rent the monthly rent goes up until the market reaches equilibrium. Once again, look at cars. Do you see a majority of the people renting cars because "prices will be lower for the same model next year"?
Like I mentioned in another comment it’s different if the housing is being built simultaneously nationwide, like Japan, then people don’t have an option. That represents a nationwide shift in mentality where housing is no longer an investment. Cars are pretty evenly priced across the nation (within a few thousand) so people don’t have an alternative. But that’s not the case here.
The speed of building is limited and may be below demand.
Often in conclusions like this a particular trend is getting extrapolated outside of the applicability region, becoming invalid.
Also I think your calculation of "rent until price bottoms out" only makes sense if the price is dropping by more, each month, than a month's rent. Idk but that seems like a dramatic drop.