# altcoin / # bitcoin / # blockchain / # exchange / # events / # ICO / # trends / # finance / # Russian news

China's "Zombie" Housing Market Could Persist Due To Lack Of Marriages

China's "Zombie" Housing Market Could Persist Due To Lack Of Marriages

For the most part, everybody understands that China's property market is in a precarious position, suffering from a massive inventory glut and little demand.

But what most people haven't considered is that the lack of demand may actually be attributable to a "decline in the number of marriages" in the country, SCMP pointed out this week

A revival of the industry "won't work" because the government, despite being able to cut debt costs and ease financial pressure for developers, can't revive the marriage rate, the report says. 

SCMP notes how marriage creates demand for the housing market:

The industry has enjoyed an incredible combination of huge volumes and high prices for so long partly due to the unique dynamics of China’s modern marriage market – men looking to marry were expected to own property, preferably debt-free.

The man’s parents and grandparents tended to pitch in, often exhausting their savings. The prospective bride’s family, free of financial pressure, would often push for purchase regardless of the price. Debt was sometimes used to plug the cash shortfall, borrowed under the names of the groom’s parents. Such demand has been a pillar of the property market.

The report then notes that marriages have fallen to a record low of 7.6 million last year, about half of what it was during its peak in 2013. 

In China, the financial burden for housing has traditionally fallen on the groom, which has acted as a tailwind for the property market. 

But now, marriage has become more expensive and demand has "plummeted". With traditional ideas of marriage and financial responsibility being questioned, social change is taking place that has slowed the rush to elope and, in turn, the rush to collectively own property. 

Author Andy Xie writes that China's real estate industry is simply becoming a "zombie" - and so are "many local governments".

And while he makes the argument for China to restructure its economy, China is unlikely to do so, he says. 

Instead, he predicts a "long slog" before the market returns to any type of normalcy. Xie says that if every marriage leads to a property purchase in the country, and if marriages don't fall further, it would still take about 10 years to run through the inventory currently on the market. 

Tyler Durden
Sat, 09/24/2022 - 17:55