Do House Prices and Marriages Move together in China?

Abstract

This paper tests the duration model to evaluate the causality relationship between house prices (HP) and marriages (MR) in China. The results find that HP do Granger cause MR in Western regions and vice versa. In the other three regions the HP does not Granger cause the MR except for Beijing and Henan in the Eastern and Central regions respectively. The shortage in the land supply, higher income, and population in the Eastern region results in housing problems and increases the competition for MR. However, relaxed land supply and a low developmental level make real estate less attractive for investors but do not hinder MR in the Western region. Moreover, MR is leading HP in Jilin in the Northeastern region because of the gender imbalance and lowest fertility rate which increases the housing demand for MR. Our results conclude that HP influence MR positively which is contrary to the duration model, stating that rising HP will decrease the MR. The government should balance regional development, the housing market, and social coordination to minimize the rising HP on the MR. As a result, it will prevent the MR from declining and will mitigate the sex-ratio imbalance as well as the housing market.

Do house prices squeeze marriages in China?

“…Zheng et al (2018) estimate that the divorce rate has a significant impact on MR in China in the short run. Moreover, house prices (HP t-1 ) and marriages (MR t-1 ) in the previous period are leading MR, similar to in the work of Ruzhi et al (2019), who identifies the same relationship. Hui et al (2012) conclude that a low birth rate causes delaying MR.…”

“…Zheng et al (2018) examine the contributing element of HPs and note the long-term positive relationship between HPs and divorce in China. Ruzhi et al (2019) detect that HPs affect MR in the Central and Eastern regions of China due to shortages of land supply, income and population. The results find no relationship between HPs and MR in the Western region, mainly driven by relaxed land supply and low economic development.…”

“…In contrast, MR has been on a declining trend, and homeownership is one of the leading contributors. This trend has boosted competition in marriage markets and has been increased by the imbalance in gender ratios across China (Wei et al, 2017;Ruzhi et al, 2019). In view of these facts, we use a threshold effect model to analyze the impact of HPs on MR in China.…”

“…A certain level of HPs has a positive impact; households do not experience budget constraints and increase the demand for both housing and MR. However, a rapid rise in HPs puts pressure on household demand and increases marriage costs, which ultimately has a negative impact on MR (Ruzhi et al, 2019).…”

“…Our problem statement is that the reform process of 1978 resulted in several effects on the form of economic development as well as social change (Ruzhi et al, 2019). The institution of MR has witnessed a declining trend.…”