I don’t want to get on the `housing ladder`

I can afford to buy a house, but I don’t want to buy. For some, that is an amazing statement.

I come from a culture (the UK) where `an Englishman’s home` is his castle, and people speak about a `housing ladder`.

China, Singapore and Hong Kong arguably have a bigger cultural obsession with housing.

I am often asked by people I know `why` I don’t want to buy, as if not buying needs justifying.

The main reasons I don’t want to buy is:

It is true there are benefits to buying property. Leverage and the ability to use other peoples money. However, leverage works in the other way — leveraged losses and negative equity. Even with leverage, the only people I have seen beat the average return of the S&P with leverage are professional real estate investors.

It is also true that in some locations, it is cheaper to get a mortgage or buy outright than to rent, but that isn’t the case in that many markets. Not only have academics found that renting is now cheaper in 65% of US cities, but many markets are so expensive that it is almost impossible to make money on housing.

Take Mainland China as an example. I have several clients who are renting in China. Often buying the same house on mortgage would cost double the rent! China is an extreme example with rental yields as low as 1%-2%, but it shows you that getting capital gains on a property isn’t automatically profitable if you would have saved money renting.

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Owner at adamfayed.com.

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