The economics of Egypt’s marriage market: How rental reforms accelerated wedlock

Housing policy in MENA has proven to affect the market, particularly when looking at “public ownership of land, poorly enforced property rights, rent control and the lack of financing.”

The process of getting married brings with it a tremendous amount of financial burden, especially in the MENA region and Egypt in particular. Research suggests that if a groom had to cover the entire cost of marriage from his own savings, it would take an average of eight years of wages in Egypt. This, of course, could lead to a delay in the timing of marriage.

Housing, meaning finding either a rented or owned housing unit, constitutes about 38% of those costs, while furniture and appliances require another 30%. Initial housing costs make up to 3.0 years of the groom’s wages and furniture and appliances amount to an additional 2.4 years of wages.

In their 2017 paper “The role of housing markets in the timing of marriage in Egypt, Jordan and Tunisia,” authors Ragui Assaad, Caroline Krafft and Dominique J. Rolando examine how housing cost, availability and policy in Egypt, Jordan, and Tunisia have contributed to the timing of marriage of men. They focus on men because marriage is most often constrained by the groom’s ability to acquire acceptable housing.

“When the acquisition of housing requires the accumulation of large sums of money up-front, the economic burden on men increases and marriage will likely be delayed,” they state.

The researchers find that with the introduction of the 1996 New Rent Law in Egypt, delays in the timing of marriage have decreased, reversing the delays that had taken place due to the old rental law of the 1960s.

What do the laws stipulate?
Rent control has been introduced in Egypt in the early 1960s, which stipulated fixed rents, even through inheritance, leading to a drop in the supply of rent apartments. In 1996, Law no. 4 was brought to life, being applied only to new rental contracts though, meaning that old contracts remained intact under the old law. The new law allowed the landlord to change the rent at the end of the contractual period and decreased the initial down payment required.

“The groom (and his family) must secure independent housing prior to marriage. Rental housing may offer a speedier alternative that does not require substantial capital upfront, but rental units [were] not necessarily available or affordable, particularly in Tunisia and in Egypt prior to the passage of the new rent law,” the paper suggests.

Ownership vs rent
Housing policy in the region has proven to affect the market, particularly when looking at “public ownership of land, poorly enforced property rights, rent control and the lack of financing.” This is coupled with high costs of homeownership, limited opportunities for low-income housing or starter homes and a small market for residential mortgages, which is usually dominated by the public sector.

This leaves the option of renting, which also comes with its burden of large down payments and key money that has to be paid upfront. Among Egypt, Tunisia and Jordan, the first country has the highest house price to annual income ratio and the highest share of rentals in the housing tenure mix.

In Egypt in 2012, couples living in nuclear households (on their own) were nearly five times as likely to live in a rented rather than an owned housing unit as compared to couples living in extended households (with their families). This shows that ownership used to be more common under the old rent law.

When do Egyptian men get married?
According to the paper, the earliest effect of the 1996 law can be seen in 1998, meaning that it would affect men born in 1970/1971.

Egypt exhibits the most striking reversal in the rise of the average age at marriage among the countries studied. The median age there had been rising steadily for men, from about 27 for those born in 1960 to about 28 for those born in 1970, and then began declining steadily to reach just over 26 for those born in the mid-1980s.

The authors also find that “living in areas with high rental rates is generally associated with later marriage.”

How did the New Rent Law of 1996 affect the marriage age?
The research suggests that the 1960s policies directed at reducing housing cost in Egypt by controlling the rent actually contributed to the delay in marriages. “Rent controls dried up the supply of rental housing or made it contingent on young couples coming up with large sums up-front for key money or multiple years of advance rent,” the study explains.

Hence, it took men longer to save up and become ready to embark on the financial burden of finding a place to live. “Once the policy changed to allow for market-rate rentals and thus substantially reduced the need for upfront resources, the age at marriage began falling again. Even if they have to pay more rent on an ongoing basis, young people are at least able to get an earlier start on their marital lives,” the authors conclude.



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