-
Agree It appears to be the case that homeownership is beneficial for the wellbeing of the majority of people, but not for all. Secure, good quality, public housing can result in wellbeing of tenants being as high as is attained by homeowners (Grimes et al., 2023), with the wellbeing of both groups being higher than for private renters. In addition, homeownership for people who are in precarious financial circumstances can lead to stress and mental anguish which reduces wellbeing (e.g. see Nettleton and Burrows, 1889 and 2000). References: Grimes A, Smith C, O’Sullivan K, Howden-Chapman P, Le Gros L, Dohig RK. "Micro-geography and public housing tenant wellbeing." Motu Working Paper 23-08, Motu Economic and Public Policy Research. Wellington: Motu. Nettleton S, Burrows R. 1998. “Mortgage Debt, Insecure Home Ownership and Health: An Exploratory Analysis”, Sociology of Health and Illness 20, 731-753. Nettleton S, Burrows, R. 2000. "When Capital Investment Becomes an Emotional Loss: the Health Consequences of Mortgage Possession in England", Housing Studies 154, 463–479.
Professor Arthur Grimes
Chair of Wellbeing and Public Policy, School of Government, Victoria University of Wellington -
Agree Multivariate regression studies have typically found that home ownership is associated with higher levels of life satisfaction. Reasons for this include: greater levels of self-esteem; greater consumption benefits; and greater levels of economic security (especially when approaching old age). Nevertheless, acquisition of a home is often accompanied by a large debt, the servicing of which can be stressful, and thus can potentially lower well-being. My own research, involving the estimation of fixed effects models using HILDA Survey data, suggests that the level of equity in the home matters much more for life satisfaction than home ownership per se. Home ownership still enters positively, but the magnitude of that effect is very small.
Professor Mark Wooden
Professorial Research Fellow and Director of the HILDA Survey Project, Melbourne Institute: Applied Economic and Social Research, Faculty of Business and Economics, University of Melbourne -
Completely disagree A positive effect of home ownership on subjective well-being is found in many studies. The main reason lies in the security that real estate ownership brings, especially with a view to old age. In addition, real estate ownership increases creditworthiness, which can open up new financial scope.
Professor Jan Delhey
Professor of Sociology, University of Magdeburg -
Neither agree nor disagree depends on the conditions of both
Professor John Helliwell
Professor Emeritus of Economics, University of British Columbia -
Neither agree nor disagree The plus and cons of home ownership vs. renting do depend on each household situation and aspirations. People who may be interested in moving or who are more open to new opportunities may derive greater well-being from renting than from owning a house. The conditions of the financial system and of the labor market do also intervene. I do believe that the main issue is not really about housing but about the conditions of the community these houses are located in. Community level factors, such as neighbors interaction, access to recreational infrastructure, public space, and so on, are more important for people's well-being
Professor Mariano Rojas
Professor of Economics, Universidad Popular Autónoma del Estado de Puebla -
Agree I think this is usually true, for the standard economic reasons: People choose to own a home because they prefer the amenities (and , in some countries, tax advantages) it provides. Of course, it may not be true if people make a mistake when they buy a house or have bad luck financially.
Professor Daniel Benjamin
Associate Professor of Economics, University of Southern California -
Neither agree nor disagree While it is possible to find links between tenancy and different measures of subjective wellbeing (e.g. Grimes et al, 2023) these links are highly sensitive to the inclusion of additional controls relating to income, physical housing quality, stability of tenure, and other factors.
Doctor Conal Smith
Principal, Kōtātā Insight -
Disagree My read of the literature is that it all depends on what "individuals' characteristics" you control for. The more you control for, the less home-ownership appears to matter - which is because home ownership is associated with many other things that make people happy, like stable partnerships and jobs, community involvement/connection, and strong social connections more broadly. So if one could control perfectly for all of those other things, home ownership by itself would contribute only very marginally to happiness.
Professor Gigi Foster
Associate Professor and Undergraduate Coordinator, School of Economics, UNSW Business School -
Agree Homeownership provides more certainty about the future expenditure path, it alleviates the financial situation for retirees and may have positive status effects.
Professor Ronnie Schob
Professor, School of Business and Economics, Freie Universitat Berlin -
Agree Homeownership is an important value in many societies around the world. People who purchase homes conform with a desirable group-identity, which conveys a sense of competence and belonging. Home's also represent wealth, which reduces financial insecurity.
Doctor Kelsey J O'Connor
Researcher in the Economics of Well-being -
Agree This is what a couple of empirical studies find (eg. https://doi.org/10.1080/02673037.2013.773583 and https://doi.org/10.3390/ijerph192214833 for Germany and China). It also concurs with what we know in general about wellbeing: homeownership is a visible status good, which is particularly important for men. It furthermore will increase the longevity and depth of local social interactions, also important for wellbeing. Only in unusual circumstances, like when mortgage interest rates suddenly increase a lot or homes are in danger of being destroyed, is it likely that home ownership increases anxiety and lowers wellbeing, situations not often in available data.
Professor Paul Frijters
Professorial Research Fellow, CEP Wellbeing Programme, London School of Economics -
Disagree There must be an enormous variation in the form and feel of rental arrangements. And the same is true of "ownership". What surely matter more is to "have" a home, a place that is one's "own". This is for reasons of safety and security, among others. The rather strange circumstances which have made ownership a non-substitutable form of savings and wealth (e.g. with subsidized mortgages in the USA) or of mate-signalling (e.g. in East Asia) are not fundamental. Therefore this causal proposition does not have much validity without more social and institutional context.
Professor Chris Barrington-Leigh
Associate Professor, McGill University -
Neither agree nor disagree On the whole, homeowners tend to have higher wellbeing than renters. This is owing to greater security and stability. However, the extent to which the difference is driven by individual characteristics should not be underestimated. Renting is often not an ideal choice for many and individual characteristics that an individual might not have much control over may bar them from homeownership eg income and wealth, including family wealth to support fitst time buying. Additionally some who manage to get mortgages may struggle with repayments more than others and this may be adverse for wellbeing.. Another important consideration on the extent to which homeowners have higher wellbeing will depend on the society. For example, whether there is decent social housing, and how predatory private landlords are will influence the difference in wellbeing between homeowners and renters. There are large differences in the housing markets across Europe eg Germany and the UK. Often renters have less security but this is more a a reflection of government choices and regulation.
Doctor Christopher Boyce
Honorary Research Fellow, University of Stirling -
Neither agree nor disagree I think it depends on the culture of one country. In the UK there is a lot of value attached to home ownership, in Germany this is not that important.
Professor Eugenio Proto
Alec Cairncross Professor of Applied Economics and Econometrics, University of Glasgow, Adam Smith Business School -
Disagree There must be an enormous variation in the form and feel of rental arrangements. And the same is true of "ownership". What surely matters more is to "have" a home, a place that is one's "own". This is for reasons of safety and security, among others. The rather strange circumstances which have made ownership a non-substitutable form of savings and wealth (e.g. with subsidized mortgages in the USA) or of mate-signalling (e.g. in East Asia) are not fundamental. Therefore this causal proposition does not have much validity without more social and institutional context. Nevertheless, in many existing contexts, home ownership is likely to be associated with greater wellbeing, for instance for the cases mentioned above as well as a number of other reasons (e.g. those cited by Odermatt and Stutzer https://link.springer.com/article/10.1007/s10902-022-00571-w). My answer is "disagree" about the causal statement because if rental housing is less amenable to customizing one's living space, or provides less security, or builds less social capital, these things reflect above all the way the rental institutions are implemented .
Professor Chris Barrington-Leigh
Associate Professor, McGill University -
Agree The Australian, German and British socio-economic panels, among others, show a (small) positive relationship between home ownership and life satisfaction. However, the life event shock variables in these data do not adequately examine what happens when we lose our home, or, become homeless; a social issue that is increasing across the western world. This is a far bigger issue: and makes one very miserable; affects our health; ability to work and care for our family, and; contribute to society.
Doctor Tony Beatton
Visiting Fellow, Queensland University of Technology (QUT) -
Agree There are many studies that find that renting produces indeed lower levels of wellbeing as compared to owning (with or without mortgage paid), even when controlling for many other variables, including income and wealth. Therefore the evidence seems clear. Nevertheless, the question remains on what is causing this lower level of wellbeing: is it uncertainty about future rents (although interest rates also can change, and thus mortgages can become an unbearable burden for some people), it is about not investing enough in the house due to a sense of being somewhere temporary? Is it because the house quality differs across renting and owning?
Professor Ada Ferrer-i-Carbonell
Professor of Economics, IAE-CSIC -
Neither agree nor disagree -
Professor Martin Binder
Professor of Socio-Economics at Bundeswehr University Munich -
Agree The positive effect of homeownership on subjective well-being seems to be an established fact (see Ong-viforj et al. 2023 for a recent partial survey), but the issue is more complicated than it appears. Firstly, adaptation to the condition of homeowner and the expectation of greater well-being than the actual one (e.g. due to exhibiting higher relative status) have a negative effect. Second, if homeownership required new debt, its positive effect diminishes. Third, the spread of homeownership among the population makes the labour market more rigid, so that unemployment and commuting may rise, with negative consequences on well-being, at least in the long run (Blanchflower and Oswald 2013). On the positive side, homeownership usually increases the formation of social capital, which is beneficial (Leviten-Reid and Matthew 2018). References Blanchflower DG and Oswald AJ (2013) Does High Home-Ownership Impair the Labor Market? NBER Working Paper 19079 Leviten-Reid, C., & Matthew, R. (2018). Housing tenure and neighbourhood social capital. Housing, Theory and Society, 35(3), 300–328. Ong-viforj et al. (2023) Homeownership and subjective well-being Urban Studies. Sept. 1-19
Professor Maurizio Pugno
Full Professor of Economics, University of Cassino -
Agree Home ownership is likely to lead to greater wellbeing than renting, even after controlling for individual characteristics (such as preferences), as it gives people a feeling of security and stability. There may be some adaptation to home ownership, though. Ownership also provides a buffer against shocks in the housing market, which may increase rental prices and thereby reduce disposable incomes. There may be relative effects in home ownership, yielding greater individual wellbeing but zero net gain in societal wellbeing.
Professor Christian Krekel
Assistant Professor in Behavioural Science, London School of Economics -
Neither agree nor disagree The answer depends on what one considers to be "individual characteristics". Homeownership is often positively associated with wellbeing. One reason is that owning a home means having more wealth, which has a positive impact on wellbeing. Also, people who own their homes often live longer in the same communities than renters. Since this is positively associated with having more social contacts and being more integrated in the community's social life, this is also associated with more well-being. However, these two factors should not be considered "causal effects" of homeownership.
Professor Andreas Knabe
Professor (Chair in Public Economics), Otto-von-Guericke-University Magdeburg -
Agree Both renting and homeownership can be associated with risks/uncertainties (increase in rent, maintenance costs, falling property values) as well as advantages (increasing property values, the freedom to decorate/renovate your home the way you want). However, norms concerning homeownership as an important life goal differ considerably between countries. The answer to this statement thus depends on the cultural and social context. In some countries, the rental market is well-regulated and renters are protected from sudden rent increases and no-fault evictions. Thus, renting is not necessarily a source of stress (unlike in countries with weak protections for renters). Relatedly, homeownership is not necessarily seen as prestigious or as an important life goal in countries in which renting is common and some people will choose long-term renting instead of homeownership to avoid unexpected repair costs and other uncertainties of homeownership. However, in countries in which homeownership is seen as an important marker of adulthood, a "failure" to fulfil the aspiration of homeownership could be associated with lower wellbeing. For example, Plagnol and Easterlin (2008) found that in the US, "a home you own" was one of the big-ticket consumer goods for which aspirations increased over the life course. Anke C. Plagnol and Richard A. Easterlin. "Aspirations, attainments, and satisfaction: Life cycle differences between American women and men". Journal of Happiness Studies. 9(4), pp. 601-619 (December 2008). https://doi.org/10.1007/s10902-008-9106-5
Doctor Anke Plagnol
Lecturer in Psychology (Behavioural Economics), City University, London
World Wellbeing Panel
In October 2023, members of the World Wellbeing Panel were asked for their views on two statements relating to wellbeing impacts of homeownership and government policies towards homeownership.
The two statements were as follows:
Statement 1: After accounting for individuals' characteristics, homeownership leads to greater wellbeing than renting.
Statement 2: Governments should adopt policies to promote homeownership.
Response options for each statement were: “completely agree”, “agree”, “neither agree nor disagree”, “disagree”, “completely disagree”.
After accounting for individuals' characteristics, homeownership leads to greater wellbeing than renting.
Governments should adopt policies to promote homeownership.
-
Disagree People who are capable of achieving homeownership can do so by themselves. Those who are not capable of doing so, may be the very people (i.e. in financially precarious situations) who would have worse wellbeing if they were enticed into homeownership through government assistance. Provision of secure, good-quality public housing may be a better targeted public policy intervention than the encouragement of homeownership for those who cannot attain it themselves.
Professor Arthur Grimes
Chair of Wellbeing and Public Policy, School of Government, Victoria University of Wellington -
Disagree The priority of Governments when it comes to housing should be to ensure that all of its citizens can obtain adequate and affordable housing. Policies to promote home ownership unfortunately too often have had the effect of driving up housing prices and rendering housing less affordable. Moreover, policies favouring home ownership typically favour the better off in our society and thus increasing the gap between "rich" and "poor". Far better for Governments to focus both on removing the barriers to housing supply and to investing in supply (especially at the low-cost end), rather than to focus expressly on home ownership.
Professor Mark Wooden
Professorial Research Fellow and Director of the HILDA Survey Project, Melbourne Institute: Applied Economic and Social Research, Faculty of Business and Economics, University of Melbourne -
Agree Enabling more people to own homes, especially those from less affluent backgrounds, is a pofund way to increase subjective well-being. However, environmental concerns should also be taken into account: multi-family houses are ecologically more beneficial than single-family houses - also with a view to the social inclusion of an aging population.
Professor Jan Delhey
Professor of Sociology, University of Magdeburg -
Neither agree nor disagree The aims should be to enable the highest quality of both forms, without special favour either way.
Professor John Helliwell
Professor Emeritus of Economics, University of British Columbia -
Disagree Governments should take care of monopolistic and oligopolistic practices in the financial sector, as well as monopsonistic practices in the labor market. Governments could do more for people's wellbeing if they focus on policies for neighborhood integration and on the provision of infrastructure that allows for it. Public space, green areas, and recreational areas may be areas where public policy may have a larger well-being impact.
Professor Mariano Rojas
Professor of Economics, Universidad Popular Autónoma del Estado de Puebla -
Disagree It distorts the market, reducing efficiency, which will make people worse off on average.
Professor Daniel Benjamin
Associate Professor of Economics, University of Southern California -
Disagree In the first instance Government's should focus on ensuring provision of high quality housing with stable tenure for residents. Whether this is best achieved through promoting home ownership, provision of social housing, or through the market sector (supported by high quality public regulation to achieve key wellbeing objectives) is highly dependent on local circumstances.
Doctor Conal Smith
Principal, Kōtātā Insight -
Agree At a societal level, higher levels of home ownership are likely to predict investment in communities, which is good for aggregate wellbeing. So even though at an individual level the contribution to own happiness of owning one's home is marginal, higher home ownership levels on aggregate can generate more stable and connected communities, thereby delivering a total-wellbeing-based rationale for government intervention.
Professor Gigi Foster
Associate Professor and Undergraduate Coordinator, School of Economics, UNSW Business School -
Neither agree nor disagree How can the government avoid subsidizing those who go for homeownership anyway? The deadweight loss of such policies may be huge and there might be better policies to promore subjective well-being.
Professor Ronnie Schob
Professor, School of Business and Economics, Freie Universitat Berlin -
Agree On net, supporting homeownership is a good thing, however, it has costs as well. I see four obvious costs and benefits. First a benefit, supporting homeownership reinforces society's value placed on homeownership, which is beneficial for those who are able to purchase homes. Second, this reinforced value is harmful for those who cannot purchase homes, because they are unable to conform with a group-identity that a larger proportion of residents belongs to, which makes non-membership all the more painful. Third, homeownership is good as a form of savings and / or wealth, which compared with consumption, could support long-run well-being, especially in the form of financial security for individuals, and national investment. Fourth, the particular policies matter and can ultimately be harmful if people who are truly unable to afford homeownership are induced to purchase. Indeed, that was a major cause of the financial crisis of 2008 in the United States. Too many people defaulted on loans that they should not have received.
Doctor Kelsey J O'Connor
Researcher in the Economics of Well-being -
Neither agree nor disagree One would need to see impact studies on policy changes to be sure. My ambiguity on this stems from the fact that homeownership policies are riddled with corrupt incentives. Politics often favours existing high-end home owners in their quest for higher house prices or rental prices (for instance via subsidies for buying), at the net expense of everyone else but under the banner of helping someone poor buy a house. So the manner of 'help' matters. Large social housing programs have often yielded good results, but the Singapore housing model whereby derelict sites are identified and used by governments to house more people, is also a well-regarded model to follow. I suspect though that the majority of policies that pretend to promote homeownership achieve bad wellbeing outcomes.
Professor Paul Frijters
Professorial Research Fellow, CEP Wellbeing Programme, London School of Economics -
Agree In terms of wellbeing, housing policy might be even more important than policies securing basic levels of income. However, it's not obvious how that relates to homeownership in principle. In Vienna, stable rental situations with good-willed landlords (esp the City) are available, attractive, and supportive of wellbeing. Nevertheless, in places like my country, Canada, where renting is well-protected but still represents relative insecurity in some places, I would advocate for lowering the barriers to "having a home", in part through making homeownership more accessible to young people, especially through ensuring that the market is providing pico-condos, nano-condos, and micro-condos mixed into other condo formats.
Professor Chris Barrington-Leigh
Associate Professor, McGill University -
Completely disagree No, they should concentrate on ensuring people have houses that are affordable and habitable.
Doctor Christopher Boyce
Honorary Research Fellow, University of Stirling -
Neither agree nor disagree I think should promote affordable housing, but not necessarily homeownership.
Professor Eugenio Proto
Alec Cairncross Professor of Applied Economics and Econometrics, University of Glasgow, Adam Smith Business School -
Neither agree nor disagree In terms of wellbeing, housing policy might be even more important than policies securing basic levels of income. However, it's not obvious how that relates to homeownership in principle. In Vienna, stable rental situations with good-willed landlords (esp the City) are available, attractive, and supportive of wellbeing. In places like my country, Canada, where renting is well-protected but still represents relative insecurity in some places, I would advocate for lowering the barriers to "having a home", in part through making homeownership more accessible to young people, especially through ensuring that the market is providing pico-condos, nano-condos, and micro-condos mixed into other condo formats.
Professor Chris Barrington-Leigh
Associate Professor, McGill University -
Agree I agree with this in as much as I expect Government to address homelessness; whether this be via home ownership, rental assistance, rental controls, or whatever is needed to safely and affordably house our fellow citizens. The right to a 'safe' place to live is inherent within liberal democratic societies. The Safety that emerges when we have a place to live is the foundation for human needs and our development (Maslo). One just needs to see what is happening in the Indigenous Australian communities in the Northern Territory to see the domestic violence, lack of school attendance by children and increased crime levels in the community that occur in communities with inadequate housing. Housing assistance programs need to focus on the needy, not promote and enable 'investment' by the middle classes, which is what happens in Australian via the tax deductibility and lack of capital gains tax on investment properties. These tax havens have been shown to contribute to rental cost increases; e.g.. nearly eight percent in some Australia states this year; ~ 20% above the August 2023 inflation rate (6.5%). National rents soared by 10.2 per cent last year (2022). Here’s how much rent costs in Australia’s most expensive and affordable suburbshttps://www.abc.net.au/news/2023-01-13/australia-most-affordable-and-expensive-suburbs-to-rent-/101845398.
Doctor Tony Beatton
Visiting Fellow, Queensland University of Technology (QUT) -
Completely disagree Following my comments above, it is not clear whether governments should favor that per se. It could be that a better renting market is preferable: house quality of the renting market, protection of rents, possibility to have social housing for renting with guarantee for the same house for all your life,… Similarly, owning a house can generate large problems if the interest rate increase a lot or the house market collapse. Many people has lost their wealth with their house. I think it is important to first understand the reasons behind the lower wellbeing to then find the right public policy.In addition, support to promote homeownership is a regressive policy that does not favor the most vulnerable in our societies and make also put people at financial risk.
Professor Ada Ferrer-i-Carbonell
Professor of Economics, IAE-CSIC -
Neither agree nor disagree I think any policies regarding homeownership need to be seen in specific regional contexts as well as in conjunction with policies on savings and pensions. It is unclear to me that well-being benefits from homeownership can be isolated well from permanent income effects and how substantial the remaining net effect would be that comes purely from "home sweet home" psychic benefits. For example, given the paucity of apartments/houses in many areas of Germany, homeownership mostly has become a reflection of wealth and government policies remedying this would be likely expensive. While there may be good reasons to make homeownership affordable for more, I'm not sure this would be predominantly justifiable with regard to well-being resulting from owning a home as opposed to renting it.
Professor Martin Binder
Professor of Socio-Economics at Bundeswehr University Munich -
Completely agree Policies should reduce the cost of housing by providing urban suburbs and small towns with adequate public transport, health services, educational services, including sports and urban facilities, and by supporting a more accessible mortgage market. Cheaper energy for homes could be achieved by promoting energy communities, i.e. citizen-led energy organisations that contribute to the transition to clean energy. In these ways, real estate rents decrease and the housing market becomes more flexible. The main beneficiaries would be young people, who could plan their lives better by ceasing to live with their parents.
Professor Maurizio Pugno
Full Professor of Economics, University of Cassino -
Agree Given my answer to the first question, I agree with this proposition, namely that governments should adopt policies to promote home ownership. However, these policies should be targeted at lower incomes and first-time owners.
Professor Christian Krekel
Assistant Professor in Behavioural Science, London School of Economics -
Completely disagree By and large, people are able to make rational decisions about when to buy and when to rent a home, based on their individual preferences and financial means. I don't see any relevant behavioral biases or external effects that would justify government interventions in these individual decisions.
Professor Andreas Knabe
Professor (Chair in Public Economics), Otto-von-Guericke-University Magdeburg -
Neither agree nor disagree It is sometimes assumed that homeownership is desirable because homeowners might take better care of their houses and neighbourhoods than renters. However, this is not necessarily true in countries in which renting is not considered to be inferior to homeownership; i.e., in countries in which renting is seen as a good long-term option supported by policies that protect renters. Policies that promote homeownership can have unintended consequences. For example, in the UK, stamp duties (which need to be paid when houses are sold) have been lowered at various points in time to incentivise home purchases, leading to increased house prices which make homeownership even more unaffordable for many. In addition, homeownership is not a good option if people do not have enough financial buffer to pay for unexpected home repairs or increases in interest rates. In that case, homeownership can quickly become stressful and unsustainable. Homeownership remains a desirable life goal though if renters are not well protected through policies.
Doctor Anke Plagnol
Lecturer in Psychology (Behavioural Economics), City University, London
The responses of our 21 panellists to both questions showed finely nuanced arguments for and against homeownership having positive (or negative) wellbeing impacts. They also indicated that caution is warranted in relation to public policies that promote homeownership.
A summary of the key themes contained in the responses is set out below. A full list of panellists and their institutions is included at the end of this summary; abbreviations in the text refer to the initials of the panellists’ names.
For the first statement, 11 of our respondents agreed with the proposition (though none completely agreed), 7 were neutral (neither agreed nor disagreed) while 3 disagreed (including 1 completely disagreed). However, almost all respondents, even those who agreed (on balance) with the statement, discussed situations in which homeownership may have some negative consequences. Several panellists warned against confusing correlation with causation. The need to control for covariates is particularly important when interpreting whether there is a causal link between homeownership and wellbeing (CS, GF).
Arguments which supported the idea that homeownership leads to greater wellbeing than renting include:
Homeownership may give greater security of tenure than renting, which is a positive for individual wellbeing (MW, JD, CBL, AF). Security of tenure may be particularly important for families with children. However, it was noted that public/social housing can result in similar benefits in terms of tenure security (CB, AG).
Financial security for the household may also be enhanced, especially if accompanied by tax breaks for owner-occupied housing (DB, KOC, RS, CBL, CK). [However, see the reasons for disagreement that are listed below for a counter view.]
A household may choose the location of their owner-occupied home to match the local amenities that they desire, whereas renters may have less ability to choose a preferred location in relation to amenities (DB).
A stable location may enhance local social capital for homeowners which has both individual and wider societal benefits, i.e. a positive externality (PF, MP, AK).
Owners, in many countries, have greater rights than renters to renovate their home to suit their preferences (AP). This aspect brings to the fore the role of institutional and legal rights of renters – for instance with respect to tenure security and ability to modify aspects of the home; these rights differ sharply across countries (CBL, AP).
House conditions may, on average, be higher quality for owner-occupied homes than for rentals and owner-occupied homes may tend to be located in neighbourhoods with more desirable characteristics (JH, MR, AFC). Again, however, institutions and local circumstances may result in different relationships across cities or countries.
Homeowners may enjoy higher self-esteem as a result of owning a home (MW, RS, KOC, PF, AP). However, if homeownership is purely a status good (including a ‘mate-signalling’ device), then this relativistic aspect of self esteem is a zero-sum game (CBL).
Furthermore, whether homeowners enjoy higher self esteem by virtue of owning a home may be culture-specific, for instance potentially being more important in the United Kingdom than in Germany (EP, AP).
Arguments put forward to counter the idea that homeownership leads to greater wellbeing (in addition to the caveats listed above) include:
Homeownership may be harmful for those who are in a precarious financial state, with mental wellbeing being placed at risk for those with potential mortgage-servicing problems (AG, PF, JB, TB). Related to this issue, it was noted that Australian data showed a stronger relationship between wellbeing and the amount of the owner’s housing equity than with homeownership per se (MW).
Renting affords individuals greater options for mobility, both within and between cities, as new opportunities arise (MR). This contrasts with lock-in faced by homeowners if there are high (financial and/or psychic) costs incurred through relocating from an owner-occupied house.
Related to issues of mobility, homeownership can result in unemployed individuals staying in a high unemployment area due to costs of moving; location restrictions caused by homeownership may also result in high commuting costs for the same reason (MP). Each of these aspects is likely to be negative for the wellbeing of the individual.
For the second statement, 7 panellists agreed (1 completely), while 8 disagreed (3 completely); the remaining 6 were neutral.
As with the first statement, those who agreed that Governments should assist homeownership were not unequivocal in their support, providing caveats to their arguments in favour of homeownership policies. The key supportive themes include:
Homeownership tends to increase subjective wellbeing, so governments can support wellbeing through promotion of homeownership. However, policies should ensure that ecological and community development aspects are incorporated into their policies (JD, KOC).
Furthermore, policies should be targeted towards low income households and first-time buyers so that the benefits don’t flow through to an expansion in wealth disparities (CK). To the extent that homelessness is reduced as a side-effect of enhanced homeownership, that outcome is an added bonus (TB).
Homeownership produces a positive externality in the form of enhanced social capital which justifies some government support for homeownership (GF).
Homeownership tends also to enhance savings and wealth creation which can be positive not only for the individual but also for society (KOC).
Key themes for those who did not agree with government support for homeownership (or which were listed as caveats by those who did support it) include:
Those who can manage homeownership are likely to make that step themselves, so additionality of any support scheme is likely to be low (AG).
People who are in financially more precarious situations may be enticed into homeownership by government support, but these are precisely the people who may suffer most mentally and financially if changed circumstances make support of a mortgage difficult or impossible (KOC, AF, AP, AG).
Policies that support homeownership may drive up house prices which makes housing less affordable for those who do not already own a home while at the same time increasing the wealth of existing homeowners, so enlarging wealth disparities (DB, MW, PF).
Rather than incentivising homeownership, governments should look to address tax distortions (which push up house prices) and address distortions within the financial sector that may make obtaining a housing loan difficult for some groups in society (MR, TB). Furthermore, house ownership should be considered within a wider remit that includes savings and pension policies (MB).
Public policies could also better focus on: improving housing supply (MW, EP, CB), improving housing quality across all categories of the housing stock (JH, CB) and focusing on neighbourhood improvement which may include better transport, parks, community facilities, energy alternatives, health and education facilities (MR, MP).
A key focus for government should be ensuring secure tenancies no matter what the form of tenure is. This aspect of policy may include laws surrounding the length of tenancies and the landlord’s ability to evict. Another policy response to achieve similar outcomes is to enhance provision of secure public/social housing (CS, PF, CBL, AF).
In addition, secure tenancies for renters improve incentives for tenants to keep the house in good order and to contribute to neighbourhood development, with positive social capital spinoffs (AP).
Finally, the point was made that if homeownership is a status good, then improving the chance of homeownership for some may worsen the subjective wellbeing of others who still cannot afford to own a house (KOC).
In summary, even though a slight majority of our panellists on balance see some wellbeing benefits of homeownership, they are not strongly of the view that subjective wellbeing is closely linked to house ownership. Most of our respondents are lukewarm (at best) about government policies that explicitly promote homeownership, especially if those policies result in higher house prices and/or transfers to the wealthy. Instead, other housing-related policies are highlighted as priority areas for policymakers to address.
Our panellists supplied the following references that relate to the themes discussed above.
References
- Blanchflower DG and Oswald AJ. 2013. Does High Home-Ownership Impair the Labor Market? NBER Working Paper 19079.
- Grimes A, Smith C, O'Sullivan K, Howden-Chapman P, Le Gros L, Dohig RK. 2023. Micro-geography and public housing tenant wellbeing. Motu Working Paper 23-08, Motu Economic and Public Policy Research. Wellington: Motu.
- Leviten-Reid C, Matthew R. 2018. Housing tenure and neighbourhood social capital. Housing, Theory and Society, 35, 300-328.
- Nettleton S, Burrows R. 1998. Mortgage Debt, Insecure Home Ownership and Health: An Exploratory Analysis. Sociology of Health and Illness 20, 731-753.
- Nettleton S, Burrows, R. 2000. When Capital Investment Becomes an Emotional Loss: The Health Consequences of Mortgage Possession in England. Housing Studies 154, 463-479.
- Odermatt R, Stutzer A. 2022. Does the Dream of Home Ownership Rest Upon Biased Beliefs? A Test Based on Predicted and Realized Life Satisfaction. Journal of Happiness Studies 23, 3731–3763.
- Ong Viforj R, Suenaga H, Brierty R. 2023. Homeownership and subjective well-being: Are the links heterogeneous across location, age and income? Urban Studies. Sept. 1-19.
- Plagnol A, Easterlin R. 2008. Aspirations, attainments, and satisfaction: Life cycle differences between American women and men. Journal of Happiness Studies, 9, 601-619.
- Seo BK, Hwang IH, Sun Y, Chen J. 2022. Homeownership, Depression, and Life Satisfaction in China: The Gender and Urban-Rural Disparities. International Journal of Environmental Research and Public Health. 19, 14833.
- Zumbro T. 2014. The Relationship Between Homeownership and Life Satisfaction in Germany. Housing Studies, 29, 319-338.