Housing Demand: Can't Take
Marriages at Face Value
Real Estate Analysis Limited
Your humble author recently
came across a news report quoting a real estate researcher who said with N
number of marriages a year in Hong Kong,
even 1/2 N would mean a lot of (buying) demand for new residential
properties. While there could be some relevance in the opinion, there is
an inherent flaw to gauge demand derived from marriages because:
A) Marriages generally
decrease the demand for residential real estate in terms of number of units
required = assume
person A has a home and person B also has a home and they fall in love and
marry. One unit is not required for accommodation anymore and thus it could
either be rented out or sold. [Note: we do not bother with the floor area of
the home and it is likely that they would need to get rid their respective
homes and get a bigger one, yet the number of residence remains at 1, not 2
as previously when they were single]
B) Divorces generally
increase the demand for residential real estate in terms of number of units
required = this
is the reverse of the above i.e. when person A and person B split up, one of
them would require a new home, be this rented or bought. [Note: again we do
not bother with the floor area and it is likely the divorcees may need to
get rid their bigger home in return for 2 smaller ones]
IF that is the case, then
why do people in Hong Kong generally associate marriages to increased
(buying) demand in residential properties?
There are a couple of
single adults to stay with parents
= While in many developed economies, especially western countries, adults,
both men and women, tend to live away from their parents even if they stay
in the same city as their parents, it is not uncommon for single adults in
Hong Kong to stay with parents and only move out when and if they are to
marry. In this context, there is some truth that marriages do produce more
linkage between marrying and buying a new home
= for some reasons unknown
to your humble author, many people in Hong Kong have throughout the past 30
years or so come to obsessively associate marriage with home-buying. At
times, couples refrain from marrying simply because they could not afford a
home yet, or as portrayed in some local TV soap operas, the
would-be-mother-in-law generally favors a home-owning would-be-son-in-law.
However, these tendencies do
not in themselves justify seeing marriages as being readily a huge
supporter-factor for increased (home-buying) housing demand.
Here are a few reasons:
marriages = it is
an open secret that a portion of marriages in Hong Kong are, should we say,
not of the love and affection type. It would be a surprise to see such
couples becoming a housing demand statistics.
between 2 home owners
= as stated in (A) above, such marriages tend to decrease overall housing
demand. They may still need to buy a new home together and sell their old
ones, which collectively mean great business (demand) for real estate agents
(agency service), yet do not confuse demand for real estate service with
demand for real estate.
between 1 home owner and 1 non-home-owner
= similar to (b) above, and while the couple may still need to seek a new
home, the overall demand for real estate remains at 1 i.e. no change here in
between 2 non-home-owners
= assuming they want or need to buy their own home AND that
they are living with their respective parents prior to marriage, yes this
would mean 1 new demand for housing.
By NO means are the above
to complicate the picture further, some couples may decide to remain
renters, change from owners to renters, stay in their public-assisted-rental
homes, and so on and so forth. Technically though, in terms of demand for
housing units, there is little or no difference between a buyer and a
Nonetheless, when people in
Hong Kong think about marriages and housing demand, most are thinking of the
buyer-type demand only.
Certainly most if not all of the time, and save for the very luxury
residential apartment complexes, the residential real estate developers are
also eyeing this buyer-type group only.
The bottom line
is that one needs to dwell a bit deeper into the marriage statistics
and gauge-guess-verify the proportions, if feasible, of the various
categories of marrying couples based on their home-owning-status etc
BEFORE a meaningful estimate of demand from marriages could be
performed. Else, it sounds more like a marketing hype.
Perhaps the media,
researchers, realtors and real estate developers should also take note of
the divorce statistics, which may prove no less intriguing.
The article and/or content contained herein are for general reference only
and are not meant to substitute for proper professional advice and/or due
diligence. The author(s) and Zeppelin, including its staff, associates,
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