Marriage-induced homeownership as a driver of housing booms: evidence from Hong Kong

Abstract

Buying a home for marriage is customary in many societies. Traditionally, therefore, young couples getting married is a key driver of demand for homeownership. Yet the idea of marriage-induced demand for homeownership is a relatively underexplored component of housing price change. We examine the role of marriage-induced demand for homeownership in Hong Kong, which is a relatively self-contained housing market with fewer options for migration than most large cities. We use an instrumental variable strategy to test the hypothesis that more unmarried individuals at the prime age for marriage increases housing prices. We find that an additional one thousand marriage-aged but unmarried individuals leads to a seven per cent increase in housing prices. These findings confirm the importance of demographic factors such as cohort size and marriage rates on housing price projections, housing needs assessments, and housing policy.

Impacts of Housing Booms on Fertility in China: A Perspective From Homeownership

“…Due to the expectation of increasing housing price, some housing speculators even buy several houses for investment (Glaeser et al 2017, Fan and Pan 2020). Meanwhile, since a house is regarded as a prerequisite for marriage, most Chinese young people bought their properties by the intergenerational transfer from their parents and became homeowners (Cheung, Chan, and Monkkonen 2020). 4 Although they still need to pay for the monthly mortgage for their house, higher housing price might help young couples accumulate wealth, given the collateral effects of housing wealth.

Figure 1.Housing price and household wealth.

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Generational variations in the timing of entry into homeownership in Shanghai: The role of family formation and family of origin

“…According to Becker’s (1974) theory of marriage, possessing a home increases individuals’ (men in particular) competitiveness on the marriage market. This marriage-induced demand for homeownership is more pronounced in Asia, where family and cultural norms are more traditional (Cheung et al, 2020). The housing tenure structure also matters.…”

“…However, among the post-80s cohort, there is a notable gender difference for both one-child and multi-child families but in a different way. It has become a widespread custom that young people, men in particular, need to become a homeowner when they get married (Cheung et al, 2020; Fang and Tian, 2018; Wang, 2018). Males in one-child families are more likely to receive financial support from the family of origin and thus get a home ready long before the marriage.…”

“…In the United States, where homeownership is the dominant tenure, couples and families move into homeownership at a quicker pace (Clark et al, 1997). In Asia, buying a home for marriage is customary, leading to marriage-induced demand for homeownership (Cheung et al, 2020). In addition to the connection between the timing of transition into homeownership and household events, the impact of parental background on an adult child’s entry into homeownership has received wide attention (Cigdem and Whelan, 2017; Mulder et al, 2015; Öst, 2012; Smits and Michielin, 2010).…”

Investigating the Influence of Associated Risks, Rewards, and External Intervention on Homeownership in Hong Kong, China

“…Hawley et al (2018) argued that land values (economic factors) and property rights have a more significant association with homeownership because every homeownership factor has economic or financial implications. These social, economic, and environmental factors and their elements such as family ties (Cheung et al, 2020), sense of place and belief does influence the decision to own a house or not. However, to what degree are these factors influencing homeownership's decision or inconsequential to homeownership issues remain critical (Ghimire, 2020;Minas et al, 2013).…”