: Your example is also designed to be advantageous for buyers. Maintenance is completely ignored, rent is high, and the house price is rather low.
I have dealt with the topic "Buying vs Renting - Model Calculations" for a long time, and a truly reliable comparison cannot be made. The calculations depend on the assumptions. Each side manipulates (shifts) and adjusts the variables until it fits. A popular tool here is, among other things, maintenance costs.
Of course, there are situations and market phases where buying is cheaper than renting. Especially whenever capital service + incidental costs + maintenance < cold rent + incidental costs. At the moment, construction costs / purchase prices are rising significantly faster than rents. Therefore, in most cases, the tenant currently has the advantage.
In the short term of 5 to 10 years, as shown by Musketier’s example, building a house certainly was a good investment from the current perspective. No one disputes that.
What has not been mentioned here is that a comparison also falls short elsewhere: A broadly diversified portfolio is compared with a single investment (house). The core characteristics of this single investment are regionality (property location) and individuality. Historical returns on the capital market can still be determined relatively well based on statistics. For the house, this is impossible. Maybe I build a floor plan that only I like but no buyer?
The risk has not been examined here either. A single investment of course involves an unsystematic risk. Single stock: management error, fraud, wrong business strategy. House: construction defects, deficiencies, planning errors. A broadly diversified portfolio eliminates this unsystematic risk and only retains systematic risk (economic downturn, etc.).
In the end, the following general statements can be made—based on the past: In individual cases, these can of course be completely wrong.
1.) For a house, usually the land gains value and the house structure only slightly increases in value or remains value-stable.
2.) In most cases, a combination of rent + capital market is more advantageous for wealth. Most tenants do not use this advantage because they consume the money.
3.) At retirement, many homeowners are wealthier than tenants. However, this is not because the house is such a great investment, but because the loan contract is a positive forced savings contract. As a result, their savings rate is significantly higher than that of the tenant.
Why do many buy/build a house even though it is economically less sensible? Because many do not have the life goal of ending up the richest person in the cemetery but, among other things, to lead a fulfilled life. Owning a house represents part of that for many and increases their quality of life.
If you consider a house as a luxury consumable item that ties up a large part of the wealth, you are certainly doing very well. Whether it proves to be a good retirement provision will only be seen later. I would not count on it.