How lonely single men created China’s dangerous real estate bubble.
As a result of the real estate boom, reports in Chinese media indicate that the average property in a top-tier Chinese city now costs between 15 and 20 times the average annual salary, though J.P. Morgan reports indicate something closer to 13. (For purposes of comparison, in most of the world’s cities, the housing-cost-to-income ratio hovers between 3-to-1 and 6-to-1, rounding out at about 3-to-1 in the United States.) This is especially problematic in China, where thanks to still-prevalent Confucian ideals of the male as the “provider,” home ownership has become an unspoken prerequisite to marriage.
“Mother-in-law syndrome” — the idea that Chinese mothers-in-law are driving up the price of real estate by refusing to allow their daughters to marry men who are not homeowners — has been widelyreported in China, but Zhang and Wei take things a step further. They show how Chinese cities with the highest ratio of men to women are also consistently the ones with the highest percentages of real estate appreciation, which follows the logic that fewer women means more competition among men and a greater need for a flashy house. At the same time, rental prices in these cities have increased minimally by comparison, lending credence to the theory that the rise in real estate prices is not driven by an actual demand for housing, but by the demand to own a house.
Yet because it’s nearly economically impossible for most Chinese men — average or otherwise — to be the providers they aspire to be, they frequently have to rely on their parents for financial support. This is a slippery slope, as it often gives progenitors more control than warranted over their son’s choice of a partner, but Chinese parents — keen to have their sons dutifully snuggled into wedlock — gladly chip in. Zhang and Wei’s study shows how this plays into China’s household savings rate, which at 30 percent is among the world’s highest. They argue that this fact is of particular economic concern, as the high marriage-related savings rate contributes to China’s current account surplus, which in turn drives down China’s exchange rate and perpetuates the global trade imbalance.
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