Summary of Key Points
The author sold the house in Nanjing, which they had lived in for 17 years (price: 3.07 million RMB for 112 square meters), at a low price due to reasons such as the child no longer being enrolled in the preferred school district, the housing price dropping from a peak of 60,000 RMB per square meter to less than 30,000 RMB, and the house becoming outdated. They have chosen to rent temporarily. The author invested the proceeds from the sale in financial products and found that the returns were sufficient to cover the rent costs. They believe that the current house has no investment value and that the rental-to-sale ratio is unreasonable, making renting a more cost-effective option. Additionally, they think the likelihood of a significant increase in Nanjing's housing prices is low and plan to wait and see in the future.
1. Why the Urgent Need to Sell?
The direct catalyst for selling the house was the loss of the school district benefit: The author wanted to sell in 2019 when housing prices were high, but the child needed to attend a particular school district, so they had to wait. This year, as the child started middle school and no longer required the school district, it was finally time to sell.
More importantly, the housing price had plummeted: From over 60,000 RMB per square meter a few years ago, it has now dropped to less than 30,000 RMB, representing a halving of the asset's value. Waiting any longer might have resulted in even greater losses.
There were also issues with the house itself: it was on the top floor (which some buyers preferred not to buy), the property management was poor (the maintenance fund had been mismanaged), the interior was outdated, and the house was old (17 years old). All these factors reduced its value, leaving only the location as an advantage. The author feared that waiting would make it harder to sell, so they decided to sell at a lower price to move quickly.
2. Is Renting More Cost-Effective than Buying? A Simple Calculation Makes It Clear
The author earned 150,000 RMB in annual income by investing the sale proceeds in a QDII financial product with a 5% return (rather than putting the money in a low-interest fixed deposit). Renting the same house for a year costs only 60,000 RMB, leaving 90,000 RMB available for other expenses.
This highlights the severely unreasonable rental-to-sale ratio in Nanjing: housing prices are high, but rent rates are low. For example, to recoup the cost of a 3.07 million RMB house through rent alone would take 50 years (3.07 million ÷ 6,000 RMB/year), which is not economical.
The author also found that renting provided a better living experience: they could buy and install whatever they needed, and the landlord was cooperative. Even if the landlord decided to terminate the lease, the moving costs were only a few thousand RMB—a minor expense that could be easily covered.
3. Can Nanjing's Housing Prices Rise Again? Unlikely!
The author believes it is unlikely for Nanjing's housing prices to increase significantly, based on three key factors:
1. Weaker Urban Development: Cities like Hangzhou and Hefei have stronger economic growth, while Nanjing lacks competitiveness compared to first-tier cities like Beijing and Shanghai.
2. Declining Population and School District Appeal: With fewer newborns, schools are facing a shortage of students, which reduces the value of school district-linked properties.
3. Surplus of Housing Supply: Most families own more than one house, and many will eventually vacate their properties, leading to an oversupply.
The recent market recovery is merely the result of pent-up demand (young people are buying affordable homes after years of price declines), not a true indication of rising prices.
4. Overcoming the Misconception That Renting Lacks Sense of Ownership
Many people feel that renting lacks ownership and are hesitant to make renovations or fear being evicted by the landlord. The author dispels this misconception with their own experience:
- Priority on Living Experience: The rented house met all their needs and was more comfortable than the old one.
- Landlords Are Reluctant to Evict: In a poor market, landlords prefer to rent out their properties rather than sell them at a low price, unless housing prices surge significantly (which is unlikely).
- Flexibility and Freedom: Renting allows for greater financial flexibility. If there are job or family issues, one is not burdened by a mortgage.
The author concludes, "It's not worth working hard all your life to empty your wallet just to buy a house."
5. The Reality of the Current Real Estate Market: Pent-up Demand but Surplus Supply
The author observes that:
- Temporary Market Recovery: After years of price declines, young people are buying affordable homes, but this is just the release of accumulated demand, not a market reversal.
- Surplus Supply Is the Norm: There is an excess of housing, and more properties will become vacant in the future.
- Stability Is Key: A sharp drop in housing prices is detrimental to both buyers and sellers. A gradual adjustment (e.g., prices falling to a reasonable level) helps stabilize the market.
In summary, the author uses their personal experience with selling and renting to show ordinary people an alternative lifestyle that frees them from the obsession with buying property. Instead of being tied to a house, it's better to let your money work for you and pursue a more comfortable life.