Making sense of my housing options [Central / Eastern Europe]

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Topic Author
AFKmike
Posts: 2
Joined: Sat Apr 10, 2021 12:29 pm

Making sense of my housing options [Central / Eastern Europe]

Post by AFKmike »

Hi BHs!

I'm in a bit of a puzzle and could use some advice or a bystander's take on this.

I'm 26, earning a good salary with a secure job. Located in Central/Eastern Europe. I'm Able to save 80-90% of my income in my current situation. I'm also currently holding more than 90% of my assets in cash as I've been saving up for a down payment for 2-3 years. Me and my partner are now ready to buy our own apartment... but the housing market is crazy and the alternative to buying - investing all of the down payment at ATH doesn't make sense as well if we were to need this money in 2-5 years.

Local housing market background: prices have more than doubled since 2010. In normal market conditions, buying is almost always better than renting where I live, even if you plan to stay for 1 year (no property tax, non-existent closing costs, low maintenance fees). For example, if I were to stay for 3 years, renting would start make sense if housing depreciates more than 1% YoY.

Current housing situation: we are WFH and living in a MCOL areas with 2,5h commute to my work (my work is in HCOL area) when I'm needed at the office. I'm currently living in a spacious apartment that hasn't been revonated for more than 40 years. Due do this, rent is incredibly low (less than 3% of my take-home pay). This also means quality of life is low and there are some health concerns (quality of air, mold has been building up in some moist areas (bathroom)).

Future: we plan to work in the HCOL area for the next 2-5 years after which we would like to settle down in the MCOL area where I'm currently living.

My options are to:
1) buy a nice spacious apartment in the MCOL area, mortgage would make 10% of my take home pay when split between my partner and I - problem is I already have ridiculously cheap housing in that area, would need to commute 2,5/rent short term in HCOL for some time, also by buying I would be making a bet for the longer future (ie settling down in that area)
2) buy a small apartment in the HCOL area, mortgage would make 13% of my take home pay when split, and keep renting the apartment in MCOL area - inventory is so low there is almost nothing to buy and we'd have to compromise on a smaller apartment
3) continue living in my current apartment, rent an apartment in the HCOL area if needed and invest - I would risk being priced out of the housing market if I wanted to buy in the future. Investing all my saved money into the market right now does not seems rational.
For 1 and 2, there's also the fear of a significant correction in the housing market.

What risks am I missing here? Any advice on how to allocate the cash if the decide to go with option 3?
WienerG
Posts: 88
Joined: Thu Feb 06, 2020 5:11 pm

Re: Making sense of my housing options [Central / Eastern Europe]

Post by WienerG »

OP,

I would make use of the MCOL are you currently live in - it is your stated aim to settle there in the next 2-5 years. Therefore I would either invest in the place you are currently renting (possibly getting the landlord to fix any major problems like mould) or buy a place in this area. If you need to go to your office in the HCOL area then you might be able to get an airbnb for 1 or 2 nights (I assume that you wouldn't need to be there the whole week), or maybe find a friend / colleague who might rent you a room for those occasions.

This way you minimise your costs in the HCOL and maximise your cost advantage in the area you want to settle.

It is unclear from your post what your plans are once you settle in the MCOL area jobwise. Maybe that is material to your decision?

Best of luck!

WienerG
Topic Author
AFKmike
Posts: 2
Joined: Sat Apr 10, 2021 12:29 pm

Re: Making sense of my housing options [Central / Eastern Europe]

Post by AFKmike »

WienerG wrote: Sat Apr 10, 2021 5:51 pm OP,

I would make use of the MCOL are you currently live in - it is your stated aim to settle there in the next 2-5 years. Therefore I would either invest in the place you are currently renting (possibly getting the landlord to fix any major problems like mould) or buy a place in this area. If you need to go to your office in the HCOL area then you might be able to get an airbnb for 1 or 2 nights (I assume that you wouldn't need to be there the whole week), or maybe find a friend / colleague who might rent you a room for those occasions.

This way you minimise your costs in the HCOL and maximise your cost advantage in the area you want to settle.

It is unclear from your post what your plans are once you settle in the MCOL area jobwise. Maybe that is material to your decision?

Best of luck!

WienerG
Thanks for the advice!

Jobwise, plan is to find another more family friendly job. I'm currently at the start of my career and working in the HCOL with my current employer (big law) is the best thing I can do for my career.

I'm inclined to not buy at the moment as the risks to buying (5-10% correction) seem to outweigh the risks to not buying (being priced out as my money loses value).
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