If inflation remains unchanged and real estate prices continue to fall, young people entering the real estate market risk losing a large part of their down payment in just one year.
This is what Ýmir Örn Finnbogason, head of business analysis at Deloitte, said in an interview The newspaper .
He said people should be aware of the risks of financing a home purchase with index-linked loans because inflation increases the principal.
He said that before young people start investing in their first property, they should stop and calculate the example based on different scenarios. During these calculations, the development of real estate prices and inflation in the coming months was of great importance.
He said there could be a “pessimistic” outcome as inflation is expected to remain at 9.6% over the next 12 months and property prices fall by 8%. If an apartment was bought for 50 million under these conditions and a guaranteed loan with a maximum rate for first-time buyers was taken out, the deposit of 7.3 million ISK would disappear almost in a year.
You can read more about the case in today’s Frétablaði .
