The rapid rise of home prices in many Chinese provinces can most readily be explained by the drive to attract a prospective sexual partner, finds a new analysis from the International Food Policy Research Institute.
“Home Ownership as Status Competition: Some Theory and Guidance,” published by Shang-In Wei, Xiaobo Zhang, and Yin Liu in the Journal of Development Economics investigates one of the economic impacts of China’s large disparity between the sexes.
“Due in part to the one-child policy, there were 120 Chinese men for every 100 Chinese women as of 2005 – in some provinces the ratio is as high as 130 to 100,” said Zhang, Senior Research Fellow at IFPRI and an author of the report. “If we assume everyone desires a traditional male-female long-term relationship, this means there are some 30 million Chinese men who might be unable to find a suitable partner.” Coupled with past surveys that have found that 80 percent of Chinese mothers would object to their daughters marrying a non-homeowner, this places a lot of pressure on Chinese men to demonstrate their value through homeownership.
“One of the most visible symbols of this status competition comes through housing. Compared with consumer goods like cars, suits, and watches, houses are large, fixed in location, and their price is easily verified,” added Zhang. “The marriage market competition probably explains why China has one of the highest homeownership rates in the world and why housing prices have appreciated so rapidly compared to income growth.”
The study explored regional variations in the Chinese sex ratios and linked them with regional variations in the size and price of houses. The results held even with the exclusion of major cities – Beijing, Shanghai, and Shenzhen – where foreign housing speculation has become common.
Tellingly, Zhang and his team members found no relationship between imbalanced sex ratios and rental prices. But that was not the story for home prices. “Strikingly, the sex ratio imbalance explained between half and one-third of the increase in housing prices in 25 major cities between 2003 and 2009.” The lesson for aspiring homeowners, Zhang thinks, is simple. “to find cheap houses, move to a province with more women.”
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The International Food Policy Research Institute (IFPRI) seeks sustainable solutions for ending hunger and poverty. IFPRI was established in 1975 to identify and analyze alternative national and international strategies and policies for meeting the food needs of the developing world, with particular emphasis on low-income countries and on the poorer groups in those countries. www.ifpri.org.