Asia real estate: Divorce? It’s the best deal in China

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Decoding the Chinese property market has always been a challenging science, but even the savviest analysts may not have appreciated one unlikely driver: divorce rates.

Step forward CLSA regional head of property research Nicole Wong, who has spotted a striking correlation between property prices and divorce rates in Beijing and Chongqing. The reason is that first home-buyers qualify for cheaper mortgage rates and low down-payments while married, but the married couple only gets one such opportunity between them.

Apparently a new pattern involves a couple buying a house in this way, then getting divorced so the other partner can gain the same preferable rates in their own name on a second property – whereupon they usually get married again.

“The mortgage rate is 100 basis points cheaper; the cost of divorce is 18bp,” says Wong. “It’s the best deal in China, probably.”