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
Statement 2: Governments should adopt policies
to promote homeownership.
Response options for each statement were: “completely agree”,
“agree”, “neither agree nor disagree”, “disagree”, “completely
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
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,
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
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
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
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,
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 tends also to enhance savings and wealth creation
which can be positive not only for the individual but also for society
Key themes for those who did not agree with government support for
homeownership (or which were listed as caveats by those who did support
Those who can manage homeownership are likely to make that step
themselves, so additionality of any support scheme is likely to be low
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
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
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.
- 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.
- 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.