China's One-Child Policy Could Be Causing Its Trillion-Dollar Housing Boom
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China’s one-child policy, which since 1979 has limited most Chinese couples to a single child, is notorious for having accelerated the rate of China’s aging. It’s also created a glut of young men who can’t find Chinese wives; by 2020, bachelor ranks will swell to between 30 million and 35 million—equal to the population of Canada.
But lovelorn suitors aren't the only fallout from China’s draconian population controls, says Zhang Xiaobo, a Peking University economist. "I just returned to Beijing [from Washington, DC], and housing prices are three times that of D.C.," Zhang tells Quartz. "If you look at all the indicators there’s a housing bubble. But despite the very low economic returns, people [keep buying]."
China’s gender imbalance contributed 30 percent to 48 percent (pdf, p.37) of the rise in real home prices in 35 major cities from 2003 to 2009, according to research Zhang and two colleagues conducted. Home values rose more sharply in cities with many more young men than young women.
And this wasn’t just in cities. Even in rural areas, Zhang and his colleagues found farmers aggressively investing in homes for their sons, usually either because a local matchmaker said they needed to if they wanted to attract a wife, or because of rising local "bride prices," the reverse-dowry that grooms must pay. (That price now exceeds $20,000 in some provinces.)
Because they lack siblings, the vast majority of Chinese couples 34 and younger are the sole inheritors of four parents' wealth. When they die, their offspring get at least two extra homes (and, given investment trends, likely more). This extra supply will drive down prices, says Zhang, and because of the one-child policy, China will have too few young people to absorb the overspill.
Meanwhile, China’s sex ratio peaked in 2005. Only children leaving the nest and move into their parents’ extra apartments and cooling bachelor competition will lower demand for new homes.
This post originally appeared on Quartz, an Atlantic partner site.