Mortgage Crisis... China Style

There is apparently a Chinese tradition, and a strong one at that, which mandates that when a man and a woman get married, the man should provide a house. This usually means the man has to buy a house before the woman (and the woman's family) will even consider marriage. In its abstract form, this tradition may seem harmless and even make a good bit of practical sense - after all, in a traditional marriage with traditional gender roles, the man is supposed to be able to bring home the bacon - but in practice, this tradition may have sown the seeds of a mortgage crisis.

The problem stems from the fact that real estate prices in China have been rising for many years and continue to rise even now. Some experts believe that the rising trend is merely a result of the urbanization of China, while others think China is in the midst of a housing bubble (personally, I have no idea and don't really care since I can't afford a house anyways).

With housing prices continuing to soar, men in China who are contemplating marriage are finding it harder than ever to secure the mortgages they need for their first house. Even though Shanghai has one of the highest average ages for newlywed couples in China (31 for men and 28 for women), the ridiculously high urban housing prices have made it so that even older newlyweds do not have enough savings to make the initial down payment or the subsequent mortgage payments on their first home.

Faced with the prospect of losing the love of their life (or depending on upward trending divorce rates, their love for the next 3 or 4 years), Shanghai men are turning to their parents to secure the funds they need to buy a home. This leads to scenarios where the groom's parents will sell their own house and use that money to buy a house in the son's name so that their son can get married. In more extreme cases, the down payment alone is not enough, and the groom's parents will continue to help with mortgage payments, usually by delaying retirement or even going back into the workforce. The parents would then be forced to move in with the newlywed couple or with other relatives.

Given China's one child policy and the traditional Chinese thinking of 重男轻女 (valuing sons over daughters) it makes sense that Chinese parents are willing to sacrifice their own well being for their son's potential well being, but this sacrifice may come at a societal economic cost. There are good reasons why banks shouldn't give mortgages to people that can't afford them. It's not that difficult to imagine a generation of young Chinese couples saddled with large mortgage payments that they can't afford because the older generation has passed away and cannot help with payments anymore. Even worse, if China is really in the midst of a housing bubble, then a crash in real estate prices would wipe out not only the young couple, but also the groom's parents who now have no place to stay and no savings.

Who knows how all of this will turn out? I just know that if I were to ask my parents to give me all of their savings to satisfy the demands of my potential bride, my parents would laugh at me to my face. Well, actually, before I even went to my parents, if my fiancee told me that my parents' savings were a precondition to our marriage... 我会昏倒不省人事。