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Effect of Purchase Quota of Housing on Marital Dissolution Summary

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Summary of “The Effect of Purchase Quota of Housing and House Price Fluctuations
on Marital Dissolution”
According to the paper “The Effect of Purchase Quota of Housing and House
Price Fluctuations on Marital Dissolution” by Xianmin Hu that it illustrates the
influence of price fluctuations in China’s real estate market to the stability of marriage
in China through two divorce factors in Beckers economic model of marriage: the
expected gain from marriage and the distribution of a variable describing. (Due to the
distribution of a variable describing is irrelevant to the topic, so the author only
focuses on the expected gain from marriage, which names housing price fluctuations.)
In this article, the author used two phenomena in the real estate market to prove the
effect of the fluctuation of real estate prices on divorce. First is the restriction on
Chinese property purchase in 2010. Second is the unexpected price volatility in the
property market.
There are three parts in this article. First is the basic situation of China’s real
estate market and marriage market. Second, property purchase restrictions and
divorce. Third, housing price fluctuations and divorce.
In China, housing and marriage are inextricably linked. When a Chinese man
wants to get married with his fiancée, he has to have one thing to convince his
mother-in-law, which is the house. Because the mother-in-law will ask him to own at
least one house before get married. This is one of the factor resulting to the rapid rise
in house prices. The other one is China’s limited residential land and fast growing

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population. “Since 2000, China’s housing prices have been rising at an average annual
rate of 8.6%, far outpacing the CPI growth of the same period (14).” In addition, the
more developed cities, the faster the housing price growth. Especially, in some
megacities, the annual housing price growth rate is more than 20%. The rapid growth
in housing prices has also brought a series of negative effects, such as inflation,
investment bubbles, and so on.
Before 2010, Chinese government has tried some methods to prevent the rise of
housing prices, just like increasing housing supply by reducing taxes, and build more
affordable housing to adjust housing market structure. However, these policies failed
to prevent the rise of housing prices. Then, during 2010, China published a new
housing policy. Not only to increase the down payment on the second house to 50%
and the interest rate to 1.1 times market interest rate, but also the policy stipulates that
“the same family can only purchase one house in the city (14).” Which results many
families in restricted cities opting for fake divorce, when one partner purchase a
second house, and they remarries. According to the data, the number of remarriages in
cities with restriction purchase increased by 42% from 2010 to 2012, while the
number of remarriages in cities without restriction purchase decreased slightly during
the same period. Also, “there was no significant difference in the growth trend
between two types of cities before 2010 (15),” which suggests that there was no other
underlying factors for the rapid growth in the number of divorcing couples in the
cities where purchases were restricted within 2 years. On the other hand, if there were
no restrictions, the divorce population in the cities with restrictions would decrease

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Summary of “The Effect of Purchase Quota of Housing and House Price Fluctuations on Marital Dissolution” According to the paper “The Effect of Purchase Quota of Housing and House Price Fluctuations on Marital Dissolution” by Xianmin Hu that it illustrates the influence of price fluctuations in China’s real estate market to the stability of marriage in China through two divorce factors in Becker’s economic model of marriage: the expected gain from marriage and the distribution of a variable describing. (Due to the distribution of a variable describing is irrelevant to the topic, so the author only focuses on the expected gain from marriage, which names housing price fluctuations.) In this article, the author used two phenomena in the real estate market to prove the effect of the fluctuation of real estate prices on divorce. First is the restriction on Chinese property purchase in 2010. Second is the unexpected price volatility in the property market. There are three parts in this article. First is the basic situation of China’s real estate market and marriage market. Second, property purchase restrictions and divorce. Third, housing price fluctuations and divorce. In C ...
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