Shenzhen has come up with an unorthodox way to suppress home prices and the original source of the soaring prices – the high divorce rate. Starting this week, the government required couples to make a 70% down payment if they buy a second home during the first two years after a divorce.
The new measures, which people ridiculed online as the toughest in history, are aimed at curbing an emerging trend – couples filing for divorce in order to enjoy a higher quota to buy a first home with only a 30% downpayment.
This was the second revision after 2016 when limits were first introduced for divorced people to buy more properties. Prior to the rule change in 2016, a Shenzhen family could buy up to two apartments with a 30% downpayment. However, many couples filed for divorce so they could own up to four apartments.
The local government then tightened its rules to allow a divorced person to buy only one apartment. But a split family could still own three apartments.
The surge in Shenzhen home prices may have a high correlation to a surge in the divorce rate in the southern Chinese city. Last year, the Ministry of Housing and Urban-Rural Development in Shenzhen said the number of homes purchased by people who divorced within two years accounted for more than one-tenth of total property transactions.
According to data from the Shenzhen Civil Affairs Bureau, the divorce rate surged 115% to 61,000 in 2017 from 28,000 in 2012.
Home prices in Shenzhen rose even higher in the same period. The average price per square meter in Shenzhen was about 54,000 yuan ($7,916) last year, up from about 18,000 yuan in 2012.
Similar divorce and property buying cases happened in other cities. Last month, a video showing a wife in Nanjing beating up a mistress on the street went viral.
Originally it was only a fight over a husband having a lover, but the mainland media found another reason behind the fight – the husband used the excuse of buying property to divorce. He transferred the property to his name and married a younger woman.