>Why buy now when prices will be lower in six months, or a year from now.
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.
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.
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.
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.
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.