Core Insights - The article discusses the significant decline in real estate prices in Guangzhou and other cities, highlighting the experiences of a homeowner who regrets his investment due to drastic price drops [1][3] - It emphasizes the importance of two key metrics for evaluating potential real estate investments: annual investment return rate and neighborhood listing rate [9][13] Market Overview - Real estate prices have dropped significantly, with Shanghai's second-hand housing prices falling by 32% from their peak, and some neighborhoods experiencing declines of up to 40% [3] - Many cities have seen prices revert to levels not seen since 2017, effectively negating eight years of price increases [3] - Despite these declines, there is uncertainty in the market, with differing opinions on whether prices have hit bottom or will continue to fall [3][4] Key Metrics for Investment - **Annual Investment Return Rate**: The average return rate in first-tier cities is currently 1.38%, which is lower than bank savings rates. A return rate of at least 5% is suggested as a threshold for worthwhile investment [6][10] - **Neighborhood Listing Rate**: A listing rate below 5% is considered ideal, indicating a balanced supply and demand. High listing rates, such as over 10% in some neighborhoods, suggest oversupply and potential further price declines [6][7][10] Conclusion - The article warns against the misconception that significant price drops automatically indicate a buying opportunity. It stresses the need for careful analysis of the two key metrics before making investment decisions [12][13]

Core Insights - The article emphasizes that simply looking at the price drop of real estate is not sufficient for making investment decisions; factors like rental income, costs, and risks must also be considered [1][2][20] - It introduces a more reliable formula for determining the bottom price for buying property, which includes calculating costs and potential returns [8][12] Summary by Sections Understanding the Market - Many individuals are experiencing significant losses in real estate investments, with properties purchased at high prices now valued much lower, leading to negative equity situations [1][2] - The focus should shift from merely observing price declines to evaluating whether the investment can generate profit through rental income [2][20] Investment Return Considerations - The article critiques a popular formula for determining the bottom price based solely on rental income and target return rates, arguing it overlooks important factors like property residual value and opportunity costs [4][5][6] - It suggests that a realistic return rate should account for the residual value of the property after a certain period, which can significantly enhance actual returns [5][11] Revised Bottom Price Formula - A new formula is proposed to assess whether a property purchase is worthwhile, factoring in annual rental income, bank interest rates, holding period, and property residual value [8][12] - This formula helps clarify the financial viability of real estate investments, especially in a declining market [12][20] Conditions for a True Bottom Buying Opportunity - Three key conditions are outlined for identifying a genuine bottom buying opportunity: rental yield must be at least 5%, low vacancy rates, and stable property prices without further decline [13][14][15][16] - The article stresses the importance of ensuring that rental income can cover mortgage costs and other expenses to avoid financial strain [14][20] Differentiating Buyer Types - The article distinguishes between first-time homebuyers and investors, noting that their motivations and criteria for purchasing differ significantly [17][19][20] - First-time buyers should focus on affordability and personal needs, while investors must prioritize rental yield and market stability to ensure profitability [19][20]