European here!
Here in Germany a great deal of people are renting instead of buying houses including me and I never felt it harming.
To the contrary, I could freely relocate within the country several times in the past years without hassle.
Owning properly in my mind seems like a chain holding me down which would have been very restrictive in my early adult years.
I also see people that did buy a house and now have 3-4 hour commutes every day as their job is at a different location that their house.
Buying just seems so inflexible. Are renting conditions here in Europe that much different that in the States?
Yes, renting in Germany is very different to the USA or UK. In Germany, if you pay your rent the landlord pretty much can't legally get rid of you. Similarly, the amount they can increase your rent is legally capped. It's very much set up to encourage long-term rental and your rights while renting are extremely strong and well-protected.
In the UK (and I assume the USA) the landlord can (with a few months warning in most cases) throw you out, raise the rent arbitrarily, pretty much whatever they want. It's their property, after all!
When I moved to Germany there was significant cognitive dissonance when I was asked to provide a copy of my work contract to prospective landlords, to prove I was worthy enough to pay them money. It turns out even if you stop paying them it's extremely difficult for them to legally evict you, hence the caution.
wow that's interesting - didnt know that its different in germany.
The rental policies there must then suppress house prices because its much more cost effective to rent than to buy, especially if you can put the extra money you didn't spend (on purchase of a house) into another form of investment.
I wonder if that system is better long term than the ups and downs of the market like the US/UK's.
> The rental policies there must then suppress house prices because its much more cost effective to rent than to buy
It's not that straightforward: Someone have to buy the units that goes onto the rental market as well, so it depends on how attractive property investment is vs. other investment opportunities.
In the UK, cheap access to "buy to let" mortgages coupled with high returns as people were unable to afford to purchase and thus bid up the rental market certainly helped push prices up during the bubble (thus pricing more people out of the market).
how is it possible to have both cheap access to mortgages, and yet have houses be unaffordable - that seems contradictory to me - and yet it does happen. Economics baffles me o_O
Cheap access to mortgages encourages people to buy. Lots of people. You are not acting in isolation. The price of housing jumps.
Adding good new stock takes time. Its not simply a matter of the time to build a new house. Its the time to develop the new area, zoning, commercial properties people want close, infrastructure, etc. It can easily take a decade in highly regulated areas.
So supply can't shift to meet demand. Prices rise because lots of people see mortgages they can afford, and jump on it. Then speculators get in the game, and tie up stock without anyone living in it. Flippers are fixing up houses, instead of letting them out. So a bubble is formed because people with good intentions made mortgages too easy, and prices climb.
