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Video: How one social custom is driving a big economic problem. A four-part series.
Editor's note: China's Bubble is a four-part multimedia series on an emerging threat to China's booming economy — a residential real estate bubble, particularly in the business and finance hub of Shanghai. The series also looks at the underlying causes of the bubble, and explores one of Shanghai's hottest residential developments.
SHANGHAI, China — In what may be the hottest real estate market on the planet, one fact of life seems extra cruel. In Shanghai, young women expect their boyfriends to buy a home before proposing.
“There’s a joke that goes Shanghai women can’t find husbands because they want a house, a car and a RMB1 million [$150,000] income,” said 28-year-old (male) sales rep Su Bei.
In truth, choosier women even go as far as to require that a spouse-to-be have paid off the mortgage entirely before popping the question.
With prices as high as they are today, young men are under enormous stress to accumulate enough money to get hitched. An eligible suitor must present an adequate dowry, in the form of a home, to the bride’s family as evidence of his suitability and ability to provide.
“I have seen many compatible couples break up because the girl’s family disapproved of marrying a man who could not afford a house,” said Ge, a Shanghainese broker whose daughter is in her 20s.
Though the total area of newly constructed homes sold doubled last year in Shanghai, supply is vastly inadequate to meet the demands of both investors looking to profit — wealthy Chinese and foreigners descending upon Shanghai — and the 1980s baby boom generation now of marrying age, and who would rather not move in with their parents.
Over the last five years, Shanghai’s average property prices have doubled to a record RMB14,986 ($2,204) per square meter, according to Shanghai’s Uwin Real Estate Information Services, far outpacing the rise in middle class income. The average home in the city's center costs about RMB34,638 ($5,094) per square meter — or the equivalent of $473,216 for a 1,000 square foot condo.
For about RMB1 million ($150,000), Su Bei purchased a yet-to-be-built 90 square meter (970 square feet), two-bedroom condo last June on the edge of Jiading District, the outermost suburb of Shanghai. As Su has only been in the working world for about five years and was earning a typical salary of RMB45,000 ($6,600) a year, his parents put down about 80 percent of the down payment.
“If my parents didn’t help me out, I would never even think about buying a home,” said Su.
Su’s parents ran the year-long home search process as well, going out nearly every weekend to see new and recently built condos. When they watched prices jump 20 percent in April alone, they panicked. They called friends and, through a back door connection, jumped the waiting line for a condo in this building.
Su’s best friend, 28-year-old Ni Ying Shi, has not bought yet, but is sweating under the pressure from his parents and girlfriend.
“How can anyone on an average salary afford it when Shanghai housing goes up by 50 percent every year?” said Ni, glumly.
He says he doesn’t want to be a member of the “keng lao zhu” — a term that literally translates to “clan gnawing away at the older generation.” It means those young folks who depend on their parents to support them.
“I told my girlfriend, we could get a place — a smaller place, maybe 50 to 60 square meters, maybe in a building built in the 90s,” Ni said. “If we wanted to we could manage it, but the truth is I don’t really want to buy a house.”
“Most girls want their boyfriends to own a house,” said 24-year-old KPMG analyst Li Meng Hua. “If he shows no sign of working toward buying a home, then parents will say that he is not very good to you.”
Li met her boyfriend of four years in college. He is a Ph.D. student and doesn’t yet have a home to his name, but she says that she wouldn’t break up with him over it.
“But if we ever separate, and I date again, it would be one of the first things I would consider before going on a date,” said Li. “This is reality.”
Paul Schittek contributed to this article.
Read the complete "China's Bubble" series: