Traditionally, it is believed that "a golden nest or a silver nest can't beat one's own doghouse" — meaning that one must own their own home in order to have a sense of stability. However, under the current housing prices, is it better to buy or rent? Let’s analyze this question from two different perspectives to see which choice might be more appropriate.
### Case Assumptions:
1. Location: Meilin Yicun, size: 118 square meters, property price: 3 million yuan, rent: 4000 yuan/month (based on information provided by Anjuke website).
2. Assume both individuals A and B currently have 900,000 yuan in cash.
3. Assume A plans to buy a house, while B plans to rent.
4. Assume both A and B have the same income.
5. Assume the mortgage term and rental period are both 20 years.
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#### **One: Analyzing from the Perspective of Cost for Buying vs Renting**
First, let’s look at buying a house. A pays a down payment of at least 30%, which is 900,000 yuan, and needs to take out a loan of 2.1 million yuan. With a 20-year mortgage, A will need to pay approximately 1.2 million yuan in interest, making the total repayment amount 2.1 million loan + 1.2 million interest = 3.3 million yuan, with monthly mortgage payments of about 14,000 yuan. After 20 years, A will have paid a total cost of 900,000 down payment + 2.1 million loan + 1.2 million interest = 4.2 million yuan, but will fully own the property.
Next, let’s consider renting. Assuming renting for 20 years, based on a monthly rent of 4000 yuan, B would need to pay a total of 960,000 yuan in rent over 20 years. If B deposits this money in the bank at a fixed rate for 5 years, the monthly interest would be 4125 yuan, which is sufficient to cover the monthly rent expense. After 20 years, B still has 900,000 yuan in cash, plus the value of the property they could hypothetically purchase later, and the total cost is the overall interest on 900,000 yuan over 20 years.
From this, we can draw the following conclusion: if both A and B live in the same property for 20 years, A will have spent a total of 4.2 million yuan and will end up owning a worn-out property. B, on the other hand, does not need to spend any additional cash and will still have 900,000 yuan in cash after 20 years. In this scenario, if the property is demolished after 20 years and compensated with 4.2 million + 900,000 = 5.1 million yuan, then A and B would benefit equally. However, if the compensation is less than 5.1 million yuan, A’s costs will be higher. Another important point to note is that even if the property demolition results in a 5.1 million yuan compensation, during these 20 years, under the same income level, the quality of life between A and B would differ significantly.
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#### **Two: Analyzing Through Rental Yield Calculations**
Since rent truly reflects the price of a house, while housing prices may contain bubbles, we can use rental yield analysis. The rent-to-price ratio = annual rent / house price. Normally, the rent-to-price ratio should fall within the range of 1:100 or 1:230, meaning it takes about 9 years or around 20 years of rent to recover the total cost of the house. However, using the above property as an example, the rent-to-price ratio is 1:750, meaning it would take 750 months, or 62.5 years, to recover the cost through renting.
If calculated based on the normal rent-to-price ratio, according to the current rent, the property price should be 4000 yuan x 100 months = 400,000 yuan, or 4000 yuan x 230 months = 920,000 yuan. This means that the actual property price is inflated by 2.08 million to 2.6 million yuan, with a bubble proportion ranging from 69% to 86%. In other words, for the current housing price to drop by 69% to 86%, there would no longer be a housing bubble, and the price would be reasonable. These numbers are alarming when compared.
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#### **Three: Conclusion**
Through the above analysis, it can be seen that as a rational economic individual, one would choose B’s approach, i.e., renting. However, due to traditional beliefs, most people in China still prefer to buy houses to ensure a sense of stability. Of course, everyone has different views, leading to different choices, and there is no absolute right or wrong.