Judging whether a house is worth buying is enough to look at the rental yield.


Rent is determined by local real income and reflects the residential value; house prices are driven up by credit, expectations, and the idea that "owning a house equals having a home," which includes a lot of symbolic value.
Taking Chengdu as an example: a house worth 2 million yuan, with an additional 500k yuan for renovation, for a total cost of 2.5 million yuan, but the monthly rent is only 3,000 yuan.
Annual rent is 36k yuan, and the rental yield is only 1.44%, meaning it would take nearly 70 years to recoup the investment.
Using an international reasonable return rate of 4% to back-calculate, the true residential value of this house is only 900k yuan, with the remaining 1.6 million yuan being "perception."
How to see this clearly? Do the math: if this house can only rent for 3,000 yuan, then its "residential value" is 3,000 yuan x 124% = 900k yuan.
The part exceeding 900k yuan is what you're paying for symbolic value.
Think carefully: are you paying for "living," or are you paying for "perception"? The answer becomes clear.
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