🏠 A beginner's guide to the real estate market: The key moments to transition from renting to buying a property

The editor has compiled the most practical guide to help beginners clearly understand the turning point from renting to buying a property!

Hong Kong's housing prices are among the highest in the world, making home ownership seem out of reach for many young people. Consequently, many Hong Kong residents first choose to rent a property because of its flexibility, affordability, and the fact that they don't immediately have to shoulder the burden of decades of mortgage payments. However, as people age and their income stabilizes, they naturally ask: When is the best time to transition from renting to buying a property?

Today, I’ll help you break down this issue, step by step analyzing the key moments from renting to buying a property, so that you don’t blindly follow the trend, but make the most appropriate decision based on your own situation.

1️⃣ Advantages and limitations of renting a property🏘️

Advantages

• High flexibility : You can move at any time without being tied to one area.
• Low entry threshold : only a deposit and first month's rent are required, no down payment of hundreds of thousands is required.
• No need for maintenance burden : If a light or air conditioner breaks down at home, it is usually the owner's responsibility.
• Suitable for transition period : for example, if you have just graduated or just started dating and living together, and don’t want to make a big investment right away.

limit

• The money becomes "rental expenses" : several thousand to tens of thousands of yuan in rent every month, and in the long run, no assets are accumulated.
• Instability : The landlord may increase the rent or take back the property at any time, forcing you to move out.
• Unable to enjoy the appreciation of property prices : the appreciation of the property market has nothing to do with you, you are just helping others to pay for their mortgages.

👉 My take: While renting is comfortable, seeing friends who have been paying off their mortgages for a few years and whose net worth is slowly increasing makes me feel like "the rent is really going to waste."

2️⃣ The critical moment of transitioning to buying a property🕰️

Accumulate to a certain level

• Down payment: generally 10%-20% of the property price.
• Other miscellaneous expenses: stamp duty, legal fees, commission, and renovation costs (the additional costs may be an additional 300,000 to 500,000 yuan).
• Emergency Fund: Have at least six months to one year's worth of contributions in reserve.

👉 When you no longer have to worry about paying rent and are able to save money every month, it means you have the potential to start considering buying a home.

Stable income

• If you have a stable job and a regular salary, it will be much easier for the bank to approve your mortgage.
• Self-employed people or freelancers need to prepare more tax returns and income proof.

👉 Editor’s advice: Start considering buying a home after having a stable job for two to three years, otherwise the mortgage payments will be too stressful.

Clear life plan

• Are you planning to get married?
• Do you plan to have children?
• Will my parents move in with me?

👉 If you already have a clear five- or ten-year plan, buying a property makes sense, as location, size, and school network will directly influence your choice.

3️⃣ Renting vs. Buying: A Comparison of the Numbers 📊

Hypothetical Situation

• Monthly rent: $18,000
• Property price: $6 million
• Mortgage: 90%, 30-year term, 3% interest rate

Rental costs

• Annual rent: $216,000
• 5-year rent: Over $1 million

Property purchase costs

• First installment: 600,000
• Monthly payment: approximately $22,000
• Even if the property price does not rise after 5 years, at least the principal has been paid and there is the property asset as a guarantee.

👉 Editor's note: Renting a property may seem easy on the surface, but it doesn't add value in the long run. While buying a property may come with a lot of monthly mortgage payments, it can help you accumulate assets and hedge against property price appreciation.

4️⃣ Mental preparation 🧘

• Accept the pressure of mortgage payments : Renting a house is stress-free, but after buying a house, monthly mortgage payments are a long-term responsibility.
• Accept property market fluctuations : Property prices may rise or fall, so don’t expect to “never lose money”.
• Don't follow the crowd : Friends and relatives often say, "If you don't buy it, you won't be able to afford it later." But the truth is, it depends on your ability and opportunities.

👉 Editor's message: Buying a property isn't about being forced into it, but about being prepared and able to handle it both mentally and financially.

5️⃣ Real case sharing👤

I have a friend named Ming who, at 28, rented a two-bedroom apartment in Tseung Kwan O for $15,000 a month. He initially thought renting was comfortable, free from the burden of mortgage payments. However, he ended up paying $180,000 a year in rent, which grew to $900,000 over five years, leaving him with absolutely no assets.

By the age of 33, he had saved over a million dollars and bought a $6 million apartment. Although the monthly mortgage payments were a few thousand dollars more than the rent, after five years of paying it back, the appreciation in the property price plus the principal repayments, brought his net worth to over a million dollars. He said, "If I had bought a home a few years earlier, I might have earned even more."

👉 This example proves that renting is suitable for the transition period, but once you are ready, buying a house is a more stable option in the long run.

6️⃣ Editor’s Summary✨

To transition from renting to buying a property, the most important things to consider are:

• Have enough down payment + miscellaneous expenses + emergency fund
• Stable income, confident in bank approval
• Have a clear life plan and know what you want
• Be prepared to bear the long-term mortgage payment
• Understand that renting is a transitional process, while buying a property is primarily about building assets.

🙋 Editor's note:
Renting isn't wrong; it buys you time and allows for flexibility. But once your finances, mindset, and planning are in place, seize the opportunity to buy. Don't wait until prices rise again and regret missing out.