> buy an apartment in the suburbs with just 3 years of salary. I rented a nice place with 1/4 of my salary
these numbers aren't directly comparable.
The rent should be compared with the interest cost of the mortgage plus the capital cost of the deposit (which at minimum is the risk-free rate).
So if you paid 1/4th of your salary as rent, but the apartment costs 3x of your salary, this means you're paying 1/12th of the cost of the apartment as rent, aka, an 8% rental yield. This is an amazingly good yield - greater than the stock market expected yield (of 7%-ish). No wonder investors would want to buy.
The general consensus is that if the rental cost is greater than 5% of the property, you're better off paying the mortgage (and conversely, if the rental cost is less than 5%, then rent is cheaper, and invest the difference would yield more financial returns).
This. If you rent a place for $1000/month that would sell for $1 million (the case usually in Beijing), a 1.2% yield (assuming no other costs, which isn't likely), things are really out of whack. Buying in Beijing never made sense, but landlords weren't banking on rents to make money anyways.
Until recently, renter rights in big Chinese cities have been miserable. Even though this had been artificial, it provided enough incentive / premium to tip the scales towards buying, even at unrealistic leverage.
That was more of a problem at the low end than the higher end of the market. I never personally had a problem with a landlord, and never heard of any other foreigner that did.
these numbers aren't directly comparable.
The rent should be compared with the interest cost of the mortgage plus the capital cost of the deposit (which at minimum is the risk-free rate).
So if you paid 1/4th of your salary as rent, but the apartment costs 3x of your salary, this means you're paying 1/12th of the cost of the apartment as rent, aka, an 8% rental yield. This is an amazingly good yield - greater than the stock market expected yield (of 7%-ish). No wonder investors would want to buy.
The general consensus is that if the rental cost is greater than 5% of the property, you're better off paying the mortgage (and conversely, if the rental cost is less than 5%, then rent is cheaper, and invest the difference would yield more financial returns).