The relationship between housing price and rent has been messed up for a long time! But the question is, is it the housing price that should go down? Or is it the rental price that should grow so that the P to R ratio, or the purchase to rent ratio, returns to its natural state?
Purchase to rent ratio
If we look at the ratio of buying and renting housing, we find that since the beginning of 1401, this relationship is no longer in favor of the owner. In other words, there is no Riyal value for the owner. If we want to see in general what the long-term average ratio of purchase to rent was, we can say that it was around 17. But from the spring of 1401 to the fall of 1402 that we calculated, there is a large gap with the long-term average. This means that housing prices have skyrocketed and rents have fallen behind.
If we pay attention to the chart of the fall of 1402, we can see that the ratio of housing price to rent has reached 4.34. This means that the mortgage is no longer a fifth of the price of the house. With simple calculations, we can understand that this ratio has reached one twelfth, that is, the selling price is 12 times the mortgaged price.
Experts’ opinion
Some experts believe that housing prices should decrease to get closer to their long-term average. But some other experts believe that the rental price is lagging behind the selling price. They expect to see a calm market in the mortgage and rental sector in 1403, but some of them consider this hope far-fetched.
Conclusion
These analyzes show that the housing market is changing and these changes can have important effects on owners, tenants and investors. Considering these changes, it is necessary for experts and decision makers to look for new solutions to manage these challenges. This can include changes in housing policies, development of support programs for landlords and tenants, and providing new solutions to facilitate the purchase and sale of housing.
According to the ratios we have seen, it can be said that a good situation cannot be imagined in the rental market in 1403, and unfortunately, we will not see a good outlook for this year in the mortgage and rental sector.
