Disadvantages of high property price
The increase in real estate prices is hailed by most people especially the home owners as this adds value to the homes and people get richer without much effort. But there are also the people who suffer due to high property prices. Let’s discuss the disadvantages of high property price.
Rich poor gap increases
High house price results in widening the rich poor gap as money moves into few hands. Due to high property price rich get richer and poor get poorer. This brings unbalance in the society and leads to social unrest.
Construction activities stall
The high property price decreases the profit margins of the builders due to which construction projects are stalled. High prices even make it difficult for the individuals to build their own homes. Therefore high property price is bad for the construction sector.
Home ownership declines
Due to high property price home ownership decrease. This is because first time buyers have to save more money for the deposits to buy a home. Worldwide home ownership is low in the regions with high property price.
Key workers suffer
Key workers like teachers, drivers, doctors and engineers are the backbone of every society. Due to high house price, key workers cannot afford to live in the city centers and therefore move to peripheries. This increases the travel time and whole society suffers.
Incomes of realtors decline
Commissions on real estate transactions are the bread and butter of the real estate agents. Due to high property price, real estate transactions decrease. The low real estate transactions mean low income of the real estate agents.
Mortgage payers suffer
High property price is always followed by a price crash. People who have bought homes in high price era find that the value of their homes is less than when they bought. This increases the suffering of home owners as they have to pay more mortgage than the value of their homes.