Why do most Chinese people have houses even though house prices are so high in China?
BEIJING: The Quora question is a good one, since I was curious about this topic for a long time. Housing prices are high in China, as well as in many other Asian countries, so it seems surprising that most Asian families own a home.
When first moving to China I had trouble understanding how that was possible. Just look at the housing prices in Chinese cities and the owners paid ridiculously high prices for them. For the same money, you could purchase a mansion in Texas, my native state.
I recall chatting with a successful Chinese businessman who loved telling stories and spoke with common sense about his homeland. I asked him how could the Chinese afford expensive homes and they don’t complain about it?
He chuckled and said most Chinese own more than one home and that’s how they save their fortunes.
He pointed out the Chinese are not good savers, because they were anointed with good spending habits at birth but they were raised from an early age to become productive members to society, get married, have a family and most importantly own a home.
For the Chinese, their home is their real security.
Chinese males must prepare a dowry for the bride and her family. The bride’s parents are given a dowry, commonly cash handouts. From my understanding, even poor Chinese men getting married in a rural region would be expected to deliver a dowry valued at 100,000 Chinese yuan at the very minimum.
The minimum dowry payment has likely risen to RMB200,000. Buying a home costs even more so that’s why many Chinese men require financial support from their parents and relatives to prepare for the wedding as they must also fund the ceremony too.
But the lavish wedding ceremony serves as an opportunity for the Chinese husband tobegin to recoup their financial losses. Guests are expected to place cash in red envelopes and we are not talking about pittance money.
Those invited to weddings usually place about a RMB1,000 or more in red envelopes.
That’s why most Chinese families, unless they are wealthy, avoid going to weddings. It’s too expensive for them. My wife Zhou Yawei is a Chinese native and she told me about the cultural customs here.
For foreign husbands, we had different requirements. When marrying my wife, her parents insisted I buy a home but I did not have enough money saved up for a home in Beijing, so we reached a compromise – I agreed to purchase a house near her hometown, a rural village in Sha’anxiprovince, and it had doubled in value from five years ago.
Home ownership for Chinese families has literally become a matter of life or death. That’s why Chinese weddings are the most stressful times for a newlywed couple.
We can learn more about the Chinese passion for home purchases from Forbes magazine. The link is here:
https://www.forbes.com/sites/wadeshepard/2016/03/30/how-people-in-china-afford-their-outrageously-expensive-homes/amp/
As reported by Forbes:
“Why there is so much liquid cash available for these relatively large down payments is straight forward: the Chinese are some of the best savers in the world. In fact, with a savings rate that equates to 50% of its GDP, China has the third highest such rate in the world. As almost a cultural mandate, the Chinese stash away roughly 30% of their income, which is often called into use for such things as making a down payment on a home — which is the most important financial transaction that many Chinese will ever make.”
The Chinese housing market is not a bubble. The real estate market will stay strong since all Chinese families believe owning a home is a necessity for cultural and societal reasons.
Source: Quora 2020-9-1
