This undated file photo shows appartments in the buildings are ready for sale. [Photo /Xinhua]
(ECNS) – A Chinese netizen's post about selling his house went viral on Sina Weibo, China's equivalent of Twitter, sparking hot debate on whether it is the right decision.
The post read: "Sold my house for 3 million yuan ($500,000). Put half of money in the bank and bought financial products with the other half. Monthly interest is over 10,000 yuan ($1,600) -- enough for rent, travel and books. Time to live my life!"
While some people applauded his courage, others asked: Is selling your house and living off the interest really a good personal finance decision?
In China, many young people struggle to buy a house, particularly in megacities like Beijing, Shanghai and Guangzhou. They tighten their belts for years to save money for the down payment, and then spend another 20 to 30 years repaying their home mortgage.
The Chinese obsession with houses is inseparable from the fact that buying a house is a good investment, as CPI rises faster than income growth and home prices continue to set new records.
Statistics show that new home prices in Beijing, Shanghai and Guangzhou rose by 365 percent, 341 percent and 261 percent, respectively, in the 10 years from 2002 to 2012.
If a country has steady housing prices or housing prices grow slower than CPI or personal income growth, buying a house is considered consumption, not an investment.
China's CPI climbs by 5 percent each year on average. That means the purchasing power of 10,000 yuan, the netizen's current monthly interest, will be equal to 5,000 yuan in 15 years. Will that suffice?
Suppose he invests the money in online monetary funds, trust funds, peer-to-peer lending or even in the stock market that may generate higher yields. Is it worth the risk?
It all boils down to one point: Buying a house sounds like a good deal in China, as it brings big proceeds like buying stocks and low risks like buying bonds.
By Qian Ruisha
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