Surge in divorces fuels HK's housing frenzy

HONG KONG • The usual suspects for Hong Kong's sky-high property prices are low interest rates, a housing shortage and demand from mainland China. But there is another unforeseen factor: divorce.

Demand for separations and remarriages has accelerated sharply over the past two decades as the territory has deepened its integration with the mainland. That is according to Professor Richard Wong, an academic at the University of Hong Kong and a veteran analyst of the local housing sector.

The numbers tell the story: Between 1976 and 1995, cumulative total marriages reached 803,072, with 84,788 divorces and 65,794 remarriages, according to Prof Wong. In the subsequent years, through 2015, marriages rose to 878,552 while divorces shot up to 323,298 and remarriages came in at 256,066.

Looser travel restrictions between Hong Kong and the mainland after Britain handed the colony back in 1997 have played a role in encouraging Hong Kong residents to find new partners across the border.

The divorce phenomenon is distinct from the mainland, where couples have sometimes separated simply to get around curbs on housing purchases.

Hong Kong's housing planners did not anticipate the wave of break-ups, according to Prof Wong. The cumulative gross number of new domestic housing units built between 1976 and 1995 reached 1,267,335. In the 19 years afterwards, that number dropped to 857,378.

The divorce phenomenon is feeding into a market frenzy that the Hong Kong government has found increasingly tricky to manage. As mortgage lending booms and prices reach records, a mix of rising interest rates, frothy property valuations and the potential for a market collapse are frequently flagged as one of the biggest risks to the economy.

In cases of marriage break- ups, both members of a former couple can end up on waiting lists for public housing, with private homes proving unattainable. Households need 18 years of median income to buy a home, more than anywhere else in the world, according to data from Demographia.

That compares with just over 12 years in Sydney, 81/2 years in London and under six years for the New York metropolitan area.

In some cases, both people may end up finding new partners from across the border.

While the trend is dominated by Hong Kong men, women are also looking further afield, Prof Wong said. "Increasingly, women are also searching for spouses across the border."

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A version of this article appeared in the print edition of The Straits Times on June 08, 2017, with the headline 'Surge in divorces fuels HK's housing frenzy'. Print Edition | Subscribe