Buy vs. Rent Tipping Point

Given upfront costs associated with buying property, renting property is typically cheaper in the short term vs. buying. Spacious’ Tipping Point metric measures the time in years that it would take for the total costs for renting a home to exceed the total cost of buying an average home in a particular neighborhood. Costs of ownership include principal and interest payments based on a 30-year fixed rate mortgage (assumes 30% down payment), plus stamp duty due at purchase, plus the agent's commission due from the buyer (assumes HK market standard of 1% of price). Property searchers who plan to stay an apartment for less years than the tipping point should benefit economically by renting instead of buying, unless they have a strongly bullish view regarding near term property price appreciation relative to other asset classes available for investment.

Spacious will update the Tipping Point map quarterly and provide trend analysis for changes in Tipping Point data from one quarter to the next.