'What is China?' Have China’s property rules led to divorces increasing?

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Story by CGTN reporter Feng Xin

— More than two dozen Chinese cities tightened property purchases to curb the overheated housing market in 2016.

— Housing prices in big cities such as Beijing, Shanghai and Shenzhen, have soared nearly 25 percent since 2015.

— Property market distortions have led many Chinese families to make some extreme decisions - like getting a divorce to become eligible home buyers.

Three months after Ms. Li’s divorce – not her real name, she still lives with her ex-husband under the same roof and picks up her two children from school every day.

Nothing seems to have changed.

Prior to the divorce, rumors had swirled that the Shanghai government was going to make it much harder for homeowners to buy a second property by increasing the down payment and mortgage rate.

Ms. Li looks for paperwork from a drawer. /Photo taken by Feng Xin

“We thought it would be really awful to hold a lot of cash without being able to buy a second apartment,” Ms. Li said. “Our money would devalue. After a great deal of consultations with friends and banks, all the information seemed to point to one rational solution - getting a divorce,” she said.

A model of a couple getting their divorce certificate. /CFP Photo

Why divorce? After a couple splits, they are able to register their existing home under the name of just one of them, allowing the other to apply for a mortgage as a first-time buyer for a new property. This would save them a huge chunk of down payment. Once done, they'd re-tie the knot... again.

Of course, the Lis were not the only ones to come up with this solution.

Ms. Li drives to her new apartment. /Photo taken by Feng Xin

“It was crazy. I had never pictured myself visiting that area of the marriage registration center,” Ms. Li said. “There were so many people there. Nobody came to get married. They all came to get divorced, lines after lines,” she said.

A screen capture of the Shanghai government’s Weibo post on Aug. 29, 2016, refuting a rumor.

On August 29th, the Shanghai government issued a notice, saying authorities had never discussed such policies. But the official denial did nothing but intensify home sales and divorce numbers the week after.

A Shanghai divorce registration center packed with couples on Aug. 30, 2016. /CFP Photo

In late November, new policies came out. Anyone having a mortgage record was considered a second-home buyer, subject to a 70-percent down payment. It didn't matter whether a property was registered under the person’s name or not. The divorce was not worth the paper it was written on – if you wanted to buy a second property that is.

If anything, the new rules were even tougher than the rumors.

A bird view of residential buildings in China’s eastern city of Nanjing. The city issued policies to regulate homeowners from buying a second property on Sept. 25, 2016./CFP Photo

In recent years, local governments around the country have repeatedly used the same method to control housing prices whenever prices overheated. They put the brakes on credit growth, required higher down-payments and put restrictions on who could buy in which cities. When prices started to drop, they loosened credit and the number of properties people could own.

Ms. Li shows CGTN reporter Feng Xin around her new property.

In late 2016, more than 20 Chinese cities enacted new policies to curb housing prices and property speculation. In December, the Central Economic Work Conference, which usually lays out the national economic plans for the following year, made stabilizing the country’s property market a priority for 2017.

The couple did buy a second property. But they haven't remarried yet. Like the housing market, their future together -- and that of their family—remains uncertain.‍