- Today, the decision to buy or rent an apartment is mainly an economic question.
- Renting can be more convenient and flexible even for people with capital.
- Higher real estate prices and instability reduce the attractiveness of buying an apartment.
- The tax system and its inconsistency also play a role in the decision.
The current dilemma of buying or renting an apartment is mainly an economic question, not a question of personal success. Renting can in many cases represent a more flexible and economically responsible solution even for people with sufficient equity who have the opportunity to invest elsewhere more efficiently. This was pointed out by Peter Varga, a partner and attorney at the consulting company Highgate Group.
According to the expert, high real estate prices, expensive capital and an unstable economic environment are changing the way people think about housing. The decision whether to buy or rent real estate ceases to be a question of security or social status and becomes primarily a question of rational capital allocation.
In the case of more expensive properties, according to the expert, their value must grow extremely fast in order to economically catch up with the alternative of renting combined with investing capital elsewhere. In many cases, leasing offers greater flexibility, liquidity and better risk management than ownership. “In an environment of high prices and expensive credit, owning a property is no longer automatically the most sensible choice. Renting can be a conscious and economically disciplined decision,” said Varga.
According to him, the discussion about housing should not be narrowed only to the price of the property, but also to less visible factors – opportunity costs, time-consuming property management, mobility and ability to quickly respond to changes in life or work situation.
The tax system also plays an important role in decision-making, which, according to analyses, significantly influences the investment behavior of individuals. The expert pointed out that the Slovak tax environment is inconsistent in relation to investments and often contradicts the state’s own declared goals.
A fundamental problem is, according to Varg, especially tax disadvantage of mutual funds compared to direct investment, high effective taxation of real estate and dividend funds, as well as the ambiguous differences between direct ownership of assets, investing through trading companies and alternative structures.
“The tax system motivates people exactly the opposite of what it declares – instead of supporting long-term and regulated investment, it pushes capital into less efficient and often riskier solutions,” Varga noted. According to him, these distortions subsequently increase the pressure on the real estate market, which is perceived as the only safe haven, and at the same time weaken the development of the capital market in Slovakia.
