I find the cultural differences with respect to home ownership fascinating.
In the US, people often own their own homes. Rarely do they own homes that other people live in. Apartments are typically owned a single owner/landlord (condos are different). Owning is a common dream, less so in cities (particularly New York).
In the UK, home ownership and the property market is an obsession. It is a common topic of conversation. People are heavily invested in their properties and often seek to buy more of them. There is a strong attitude of "if I don't buy now I'll never be able to afford to live here", particularly in London and the Southeast (less so now I suspect). The North and West are somewhat different. The market is highly speculative.
In Switzerland, the property market is essentially controlled. There is little real estate speculation. Transaction costs are high. Capital gains taxes on properties can be brutal, which strongly discourages speculation. Renting is not frowned upon. For tax reasons, people often buy houses and never pay them off. In Switzerland you get a tax exemption for interest but you also get deemed income from the effective rent the property is worth.
In Australia, owning one's house is a cultural obsession. People often end up owning multiple properties. There are few apartment buildings owned by one owner (it's much more like the American condo system).
I think of all the systems I've personally experienced, I like the Swiss system the most. It treats property as something you need to live not a financial instrument to speculate on.
That system isn't applicable everywhere however. Switzerland is unique in that it is fairly affluent, has a small population and very restrictive immigration. So somewhere like the US has >40 times the population so even excluding immigration, domestic movements of people can be incredibly large creating market pressures in places like New York that Switzerland will simply never experience.
Some years ago I saw an article (I'm sadly unable to find but the topic is covered elsewhere in depth) in the UK which showed that the rate of home ownership was inversely proportional to economic growth. The idea was that home ownership reduces labour market flexibility (which it clearly does). I don't know if the trend still holds up.
In Australia for example a family home can easily cost $1 million in Sydney. If the household income is $200,000 and that family wishes to move to, say, Melbourne and buy a new house they'll pay $20-50,000 in realtor fees and $50,000+ in stamp duty on buying the new house so they need to make back nearly $100,000 of after-tax income just to break even.
Sadly stamp duty is a cash cow for state governments in Australia so isn't going anywhere anytime soon. Yet I think it's a real problem. Transaction costs need to be relatively low. Financing requirements need to be relatively to limit rampant speculation, particularly in overheated markets.
To offer another very diverging datapoint: In Germany, renting is the norm, though owning something you aspire to, either as a home you plan to spend the rest of your life in (thus protecting you against market troubles) or an inflation-safe part of an investment portfolio. Speculation on home prices is virtually unknown (and there was no housing bubble).
Somewhat off-topic, but what's the rental situation like in Australia for those moving to the country? Are there substantial obstacles to a non-citizen resident like there are in other countries like Japan? My wife and I are planning a move, and this is something I've not been able to Google up very well.
Renting is quite expensive. The rental markets in Perth, Melbourne, Sydney and Brisbane is very competitive. It is not uncommon for 50 people to show up to inspect an apartment before renting. However, it is still possible to find some real gems (for example, massive old houses and really quirky places). Price is often relative to access and services, if you can drive you can usually find somewhere cheaper that doesn't have access to public transport.
As for restrictions on foreigners, there is nothing like Japan's rules. Bond is usually 4 weeks rent and rent must be paid in advance in most states. Tenancy laws strongly favour tenants.
> Somewhat off-topic, but what's the rental situation like in Australia for those moving to the country? Are there substantial obstacles to a non-citizen resident like there are in other countries like Japan? My wife and I are planning a move, and this is something I've not been able to Google up very well.
Which city are you moving to? Perth is fairly competitive right now, and price will be heavily dependant on your proximity to the CBD and major transport routes. I'm about 7kms from the CBD and pay about $440/week* for a 3x1 '60's home. House is weatherboard with great floorboards throughout and a huge (as in, too big for me!) yard out back.
Took us a few months to find a place though, and it is pretty competitive. It's a sellers market right now so they can afford to be choosy with who they lease it out to, but the actual paperwork requirements are rarely very onerous (job references, rental references, holding deposit).
* To own a home like this, which sold for $600k to the current owner (or thereabouts), would cost me closer to $1000/week in mortgage repayments over 30 years.
Rental situation is quite decent - from memory Australia has one of the lowest rent to equity ratios in the developed world.
There is a huge rental market for temporary residents largely driven by international students. I've heard of international students living in poor rental conditions, but that is often the result of a willingness to live in cramped squalor. I've also heard of landlords demanding high bonds for temporary resident renters, however note that in most states bonds higher than 4 weeks' rent are illegal.
Provided you have a valid visa you should be able to find decent rental accomodation, I would also recommend having a reference from a landlord (and/or employer).
I have nothing to add to all the other comments on this subject, except personal experience: I'm an Australian landlord myself and have a non-citizen (a Pom, iirc) as a tenant. Legally there weren't any barriers, and I don't give a damn where he's from as long as he pays the rent.
I just went through this in January, and while I wouldn't say there are substantial obstacles for non-citizens, you need to make sure that you have enough documentation. The rental vacancy rate is pretty low in Sydney, so there's a fair amount of competition for the better places (as mentioned above). Not having the right paperwork can definitely lower your chances of getting a place. I wrote about our experience here and would be happy to share more: http://www.lifewithkandr.com/2011/05/first-hand-guide-rentin...
The rental market in the inner suburbs of Sydney is pretty expensive. It certainly helps to have employment and real estate agents will often ask for some kind of employment reference.
I don't know of any impediments for non-citizens in terms of renting. I've employed people on working holiday visas, short-stay business visa, permanent residency and citizens, and they all seem to be able to find rental accommodation in the inner suburbs of Sydney without too much problem. I've usually provided an employment reference either verbally or on paper.
In the US, people often own their own homes. Rarely do they own homes that other people live in. Apartments are typically owned a single owner/landlord (condos are different). Owning is a common dream, less so in cities (particularly New York).
In the UK, home ownership and the property market is an obsession. It is a common topic of conversation. People are heavily invested in their properties and often seek to buy more of them. There is a strong attitude of "if I don't buy now I'll never be able to afford to live here", particularly in London and the Southeast (less so now I suspect). The North and West are somewhat different. The market is highly speculative.
In Switzerland, the property market is essentially controlled. There is little real estate speculation. Transaction costs are high. Capital gains taxes on properties can be brutal, which strongly discourages speculation. Renting is not frowned upon. For tax reasons, people often buy houses and never pay them off. In Switzerland you get a tax exemption for interest but you also get deemed income from the effective rent the property is worth.
In Australia, owning one's house is a cultural obsession. People often end up owning multiple properties. There are few apartment buildings owned by one owner (it's much more like the American condo system).
I think of all the systems I've personally experienced, I like the Swiss system the most. It treats property as something you need to live not a financial instrument to speculate on.
That system isn't applicable everywhere however. Switzerland is unique in that it is fairly affluent, has a small population and very restrictive immigration. So somewhere like the US has >40 times the population so even excluding immigration, domestic movements of people can be incredibly large creating market pressures in places like New York that Switzerland will simply never experience.
Some years ago I saw an article (I'm sadly unable to find but the topic is covered elsewhere in depth) in the UK which showed that the rate of home ownership was inversely proportional to economic growth. The idea was that home ownership reduces labour market flexibility (which it clearly does). I don't know if the trend still holds up.
In Australia for example a family home can easily cost $1 million in Sydney. If the household income is $200,000 and that family wishes to move to, say, Melbourne and buy a new house they'll pay $20-50,000 in realtor fees and $50,000+ in stamp duty on buying the new house so they need to make back nearly $100,000 of after-tax income just to break even.
Sadly stamp duty is a cash cow for state governments in Australia so isn't going anywhere anytime soon. Yet I think it's a real problem. Transaction costs need to be relatively low. Financing requirements need to be relatively to limit rampant speculation, particularly in overheated markets.