The Relationship between Housing Market Intervention for First-Time Buyers and House Price Volatility

Declining homeownership rates as observed in many western countries have direct and indirect implications for the broader economy; hence, governments have been seeking an effective solution to address this decline. One of the major challenges is the decline in overall homeownership rates with an increasing proportion of households deciding to rent rather than purchase. However, it is surprising that the impact on the housing market following the introduction of a first-time housing subsidy scheme has received relatively little attention. This study addresses this knowledge gap by examining the relationship between (1) housing market intervention based on first-time owner subsidies in a global city and (2) the level of house price volatility in the broader market. For example, the Australian government has implemented different policies designed to ease housing stress among first-time buyers; one high-profile policy was the First-time buyer Grant or First Home Owner Grant (FHOG) in which a cash payment or subsidy is given to new first-time buyers as a direct incentive. Based on a case study approach, an analysis is undertaken of the first-time buyer policy where an innovative approach using the E-GARCH model is employed to assess the effect of the scheme on the housing market. The findings indicated that the FHOG scheme offered a stabilisation effect on the housing market. In addition, there is evidence to support implementation of the FHOG scheme as an effective scheme to enhance housing affordability of first-time buyers. The findings offer a rare insight into the effectiveness of the FHOG scheme in enhancing housing affordability and also maintaining price stabilisation in the broader housing market.     

Family formation,parental background and young adults’ first entry into homeownership in Britain and Germany

Abstract

Although previous research shows that family dynamics and parental socioeconomic status influence the timing of young adults’ first entry into homeownership, much less is known about how the role of family factors may vary across countries with different housing systems. In this article, we use panel survey data from Britain and Germany to compare how family life course careers and parental socioeconomic background influence young adults’ initial entry into homeownership in these two divergent national contexts. The results show that in Britain, first-time homeownership transitions are tightly synchronized with partnership formation. By contrast, in Germany first moves into homeownership typically occur later around or after the arrival of children. Parental owner-occupation accelerates entry into homeownership in both contexts, while the effects of other parental characteristics are relatively muted. Furthermore, the results highlight how individual socioeconomic factors are critical determinants of entering owner-occupation. This is particularly true in Britain where there is a strong socioeconomic gradient in first-time homeownership transitions.     

The Changing Route to Owner Occupation: The Impact of Student Debt

The 1990s saw a considerable fall in young adult homeownership rates in Britain. There is a concern that the future might hold further falls as a result of reforms to financing higher education. Using estimates from a housing tenure choice model, this paper conducts micro-simulation analyses to assess how this change could affect young adult homeownership transitions. The simulations reveal that increased student debt levels and the new repayment profile and their interaction with lender-imposed borrowing restrictions delay a first-time homeownership transition. The extent of the delay primarily depends upon the expected earnings profile, but lender criteria and general rises/falls in real house prices are also important. The analysis suggests that there will be much greater variation in the timing of house purchase between different groups of future graduates, brought about by increased graduate earnings heterogeneity, homeownership affordability schemes targeted toward specific types of households, and parental financial assistance.     

Just Housing Policy: Is There a Moral Foundation for a Homeownership Policy?

There is no lack of social and political reasons in favor of public policies oriented toward helping people to become homeowners. In this study, we undertake a normative inquiry into the moral foundation, if any, behind those politically viable and beneficial publicly supported homeownership programs. What we want to examine is whether public support of homeownership is a question of justice or merely a matter of beneficence. In particular, we have reviewed three different portrayals of homeowners: homeowners as right-holders; homeowners as stakeholders; and homeowners as decent citizens. Our position is that it would do more harm than good to defend homeownership as a matter of basic rights; instead, homeownership can be justified by developing Bruce Ackerman's idea of stakeholding and the notion of asset-building as championed by Michael Sherraden. To conceive homeownership as what people deserve as stakeholders as well as a form of lifelong asset that people can rely on when encountering risks and contingencies provide sufficient ground to render public support of homeownership.     

The decline of a homeowning society? Asset-based welfare,retirement and intergenerational equity in Australia

Researchers have increasingly recognised a link between homeownership levels and retirement policy, particularly in English-speaking welfare states. Housing is central to asset-based welfare policies, which may enable households to efficiently manage life course risks, but may exacerbate wealth inequality and expose them to market volatility. Australia presents an important case for understanding the dynamics of asset-based welfare, with its retirement approach combining high homeownership rates and a limited public pension. This paper investigates emerging generational differences in homeownership in Australia. Recent research has identified declining homeownership amongst younger cohorts. Using cross-sectional data, we explore alternative theoretical explanations for this trend. We find no evidence that declining homeownership reflects changing investment choices or delayed family formation. Instead, recent trends are consistent with intensifying inequalities based on class and care responsibilities. This casts doubt on the viability of Australia as a homeownership society and asset-based retirement policies in a financialised economy.     

Homeownership,Asset-based Welfare and the Neighbourhood Segregation of Wealth

The asset-based welfare approach, which has foremost encouraged homeownership, has led to rising homeownership rates, house prices and household debt levels. While this shift has helped raise the net worth of some among the middle and working classes who own property, the implications for the spatial distribution of wealth in cities have not yet been explored. This paper examines the spatial implications of the rise of policies promoting asset-based welfare, by examining statistically how variables related to homeownership rates and housing prices relate to measures of urban wealth segregation among neighbourhoods. Canadian cites are used as the main case study for the empirical analysis. The findings suggest that while homeownership in general has an equalizing effect, rising rates of homeownership (and to some extent, rising house prices) are associated not with greater spatial equalization and dispersal of wealth, but instead with greater spatial segregation and concentration of wealth within cities.     

The Relationship Between Homeownership and Life Satisfaction in Germany

The article investigates the relationship between homeownership and life satisfaction in Germany, using German Socio-Economic Panel Study data from 1992 to 2009. The data not only allow controlling for a wide range of variables, but also tackle various measurement problems of previous studies. Ordered logit models support a positive relationship between homeownership and life satisfaction. In addition, regression models with fixed effects also reveal unobserved differences between homeowners and renters. Further results show that homeownership is particularly important for low-income households and that there is a significant interaction between homeownership and the condition of the dwelling as well as homeownership and the financial burden of the household. Overall, the findings indicate that policies aim at a higher degree if life satisfaction should not focus on the promotion of homeownership alone, but also support home maintenance costs.     

Intersections of inequality in homeownership in Sweden

Abstract

Inequalities relating to ownership of housing have become a major issue de jour in many Western societies. This article examines how the distribution of homeownership in Sweden relates to two factors widely seen as significant to such inequalities, namely parental tenure status and place of birth. We use longitudinal registry data to examine the bearing of these two factors on individual-level tenure progression since the beginning of the 1990s for persons at different stages of their housing careers. We extend existing understandings of Swedish homeownership patterns by demonstrating that inequalities relating to place of birth and parental tenure intersect with one another in ways that substantially advantage certain subgroups while disadvantaging others, and by demonstrating that experiences of entry into homeownership have in recent years been changing in markedly different ways for these different subgroups. Overall, Swedish homeownership inequalities, far from dissipating, appear to be hardening along existing lines.     

A Different Path to Homeownership: The Case of Taiwanese Immigrants in Los Angeles

Taiwanese immigrants in Los Angeles stand in contrast to the well-documented homeownership deficit among immigrants. Despite the tremendous growth in Taiwanese immigrants during the 1980s, the Taiwanese homeownership rate was not only among the highest of all ethnic groups in 1990, but also recorded a phenomenal increase of 16 percentage points between 1980 and 1990. This paper examines this trend and assesses the contributing factors. It reveals that (1) education and wealth were contributors to Taiwanese high homeownership; (2) Chinese immigrants in general and Taiwanese immigrants in particular had endowment-adjusted homeownership rates well above that of non-Hispanic whites, while the ways in which ethnic Chinese immigrants achieve high homeownership were reflective of their distinctive paths of immigration; (3) surprisingly, higher English proficiency, an indicator of acculturation, was negatively associated with Taiwanese homeownership; (4) the large rise in Taiwanese homeownership in the 1980s was largely contributed to by young, highly educated, newly arrived Taiwanese with a low level of income and a high level of wealth. Findings refute the hypothesis that immigrants are always plagued by homeownership deficits. Well-off immigrants, such as the Taiwanese, may have followed a path of assimilation not yet documented in the literature; acculturation and social adaptation may no longer be preconditions for their economic integration. The arrival of well-off immigrants has a significant potential to bolster regional demand for owner-occupied housing.     

Small Area Variation in Homeownership

The aim of the study is two-fold. First, it adds to the existing state-of-the-art housing research by suggesting the implementation of new econometric methodology. Specifically, the study adds to earlier studies of homeownership by adding spatial impacts. It advocates simultaneous adjustment for intra-municipal correlation and heterogeneity as well as spatial spillover patterns between municipalities. It concludes that ignorance of controlling for intra-municipal correlation, heterogeneity and spatial spillover skews conclusions regarding effects of the determinants of homeownership. Furthermore, it finds that endogenous as well as exogenous spatial spillovers are essential parts of specifying demand for homeownership. Specifically, the demand for homeownership spills over and stimulates demand in neighbouring municipalities, and house prices and incomes exert positive effects on demand for homeownership in neighbouring municipalities. Second, as is clear from the above empirical conclusions, the study adds to existing empirical research and knowledge.     

Does the ethnic gap in homeownership vary by income? An analysis on Dutch survey data

Lower levels of homeownership among immigrant populations have frequently been related to the particular financial constraints that immigrant households can face. Various problems have been raised with this explanation for the ethnic gap in homeownership rates. This paper responds to these criticisms by sensitizing the financial constraints explanation to the possibility of differential effects of ethnicity depending upon level of income. The hypothesis that the ethnic gap is stronger for lower income groups is tested through logistic analyses of the housing tenure of Turkish and Moroccan immigrants and a comparison group of native citizens in the Netherlands. High-income Turks are revealed to have comparable rates of homeownership to high-income natives, whereas in low-income groups a large ethnic gap exists. The ethnic gap in homeownership among low-income groups could not be explained by other financial constraints (education, couple’s earning status, parental resources). Housing preferences and discrimination are possible explanations for this ethnic gap among low-income households.     

Housing Inequality in the United States: Explaining the White-Minority Disparities in Homeownership

As the homeownership rate in the United States reached its highest ever level in 2004, the distribution of homeownership remained uneven along racial and ethnic lines. Using data from the 2005–2007 3-Year Sample of the American Community Survey (ACS), this paper employs a multivariate regression model and a decomposition technique to delineate the socio-economic and demographic characteristics as well as the immigration and spatial patterns that shape racial and ethnic inequality in homeownership. The findings reveal three distinct patterns; the Asian-white homeownership gap is explained entirely by differences in immigration and spatial patterns of residence, whereas the disadvantage of blacks and Puerto Ricans is attributable to demographic, socio-economic and unobserved factors. For Mexicans and other Hispanics, all four sources influence homeownership patterns, with socio-economic factors relatively important for Mexicans and spatial variables relatively important for other Hispanics.     

The distribution of housing wealth in 16 European countries: accounting for institutional differences

Housing wealth is the largest source of household wealth, but we know little about the distribution of housing wealth and how institutions have shaped this distribution. Subsidies for homeownership, privatisation of social housing and mortgage finance liberalisation are likely to have influenced the distribution of housing wealth in recent decades. To examine their impact, we describe housing wealth inequalities across occupational classes for two birth cohorts aged fifty and older. The analysis is conducted across 16 European countries with divergent welfare states and housing systems using the fourth wave of the survey of health, ageing and retirement in Europe (SHARE; 2011/2012). Our results indicate that the expansion of homeownership in a market-based housing system is associated with a more unequal distribution of housing wealth across occupational classes, as an increasing number of ‘marginal’ owners are drawn into precarious homeownership. Such a pattern is not found in housing wealth accumulation regimes with a less market-based provision of housing. When the state or the family drive homeownership expansion, a de-coupling of labour market income and housing consumption results in a more equal distribution of housing wealth.     

Panic Rooms: The Rise of Defensive Homeownership

This paper documents how and attempts to explain why homeowners have adopted an increasingly strategic approach to the defence of the home and the progressively vengeful pursuit of those who invade the home. This approach has been articulated via the political process as well as through a media ‘conversation’ that form a milieu within which defensive homeownership has emerged. It is suggested that a threshold has been crossed marking a transformative moment in which left-leaning calls for understanding have been supplanted by a call for the increasingly vicious defence of home territories. In a broader context of neo-liberalism the transition toward increased privatism, freedom of choice and unfettered agency now closely correspond to the position of homeowners as ‘consumer sovereigns’. Defensive homeownership therefore appears not only as the aspiration of homeowners for safety but also as a result of a complex interrelationship between political, media and ideological systems that have generated strong impressions of risk and victimisation. The paper documents the powerful socio-legal and political discourses which have reinforced territorial instincts while generating a broader culture of fear played out through celebrated cases in the public domain. In conclusion, it is argued that defensive homeownership expresses an aggressive aspect of the socio-political constitution of that tenure and a broader need for the deployment of cathartic public policies in defence of embattled home territories.     

Partnership patterns and homeownership: a cross-country comparison of Germany,the Netherlands and the United Kingdom

Using detailed micro-level survey data for three advanced European welfare-state economies (Germany, Netherlands and UK), our analyses suggest a fairly common hierarchy to homeownership, according to partnership status, exists. In all three countries, a variety of interrelated factors appear to encourage greater propensities for homeownership amongst co-residential households (married/cohabiting), as compared to single-person households. However, important macro-contextual differences do appear to play a significant role in mediating the magnitude of difference within this hierarchy. For instance, in Germany the importance of marriage as a predictor of homeownership is found to be particularly strong, with married couples having far higher propensities for homeownership, even when compared to non-married cohabiters. In the Netherlands and UK, where an emphasis on traditional family and marriage is less pronounced, and where homeownership is generally more popular and accessible, the differentiation between married/unmarried partners is greatly reduced. Furthermore, we find no evidence to suggest that living-apart-together partners are more/less likely to own their home than singles.     

Entry to homeownership among immigrants: a decomposition of factors contributing to the gap with native-born residents

This article contributes to research on the homeownership gap between immigrants and native-born residents in Western countries, extending earlier research using longitudinal data and studying a country with a short history of immigration. Discrete-time survival analysis and statistical decomposition are applied to compare the duration of entry to homeownership between non-Western immigrants and native-born residents moving to the Helsinki Metropolitan Area in Finland, using individual-level register-based data from 1990 to 2008. The results show considerable differences between groups in the speed of entry to homeownership. The majority of these differences can be explained by observed differences in economic and demographic characteristics. Therefore, differences in economic integration are an important explanation for the homeownership gaps. However, for some groups, considerable gaps remain, requiring additional explanations. From a methodological viewpoint, the results indicate that in cross-sectional analyses, the significance of economic resources as an explanation for the homeownership gaps may be underestimated.     

FRIENDS AND NEIGHBORS: HOMEOWNERSHIP AND SOCIAL CAPITAL AMONG LOW‐ TO MODERATE‐INCOME FAMILIES

ABSTRACT: This research explores whether homeownership leads to increased individual social capital among low‐ to moderate‐income families. Social capital refers to social resources a person can access through contacts with others in his or her social networks. We theorize that homeownership can motivate interactions with others in one's neighborhood and therefore build social capital. Using a sample of low‐ and moderate‐income homeowners and a matched sample of renters, we collect data on overall social resources and neighborhood‐specific social resources. We find that homeowners have more total social capital resources and more neighborhood social capital resources than renters. Neighborhood group involvement has an indirect effect on social capital, but explains only a small amount of the influence of homeownership. These findings hold when controlling for household‐level and neighborhood‐level sociodemographic variables, as well as when using statistical models that account for endogeneity. Based on this evidence, we conclude that homeownership gives people access to social capital via increased social ties to others. We discuss the implications of this finding for housing policy and suggest new directions for research on social capital.     

Urban History Matters: Explaining the German–American Homeownership Gap

The homeownership rate in the United States has continuously been about 20 percentage points higher than that of Germany. This homeownership gap is traced back to before the First World War at the urban level. Existing approaches, relying on socio-economic factors, demographics, culture or housing policy, cannot explain the persistence of these differences in homeownership. This article fills this explanatory gap by making a path-dependence argument: it argues that nineteenth-century urban conditions either began to create the American suburbanized single-family house cities or compact multi-unit-building cities, as in Germany. US cities developed differently from German ones because they lacked feudal shackles, were governed as “private cities” and gave easier access to mortgages and building land. The more historically suburbanized a city, the lower its homeownership rate today. Economic and political reinforcing mechanisms kept the two countries on their paths. The article’s contribution is to give a historical and city-focused answer to a standing question in the housing literature.     

Cyclical versus Structural Sustainability of Homeownership: Is Counter-cyclical Intervention in Housing Markets Enough?

The economic and housing market difficulties that emerged as a result of the recent global financial crisis (GFC) have encouraged a focus on the cyclical sustainability of homeownership. As a result, there has been inadequate attention paid to the impact of increased real household incomes and wealth on the structural sustainability of a housing system built on homeownership as the dominant tenure. This paper argues that, where housing supply is relatively inelastic in the long run, underlying demand pressures may keep house prices on a path which continues to diverge from household incomes. This will add to borrowing constraints already faced by aspiring first homeowners with low and moderate incomes and with limited wealth. If financial institutions tighten lending standards in response to the GFC, households with limited equity and limited capacity to pay will find it even more difficult to gain access to finance than has been the case in the past. This raises the question of whether homeownership can be sustained at its current levels. The paper uses outcomes in Australia to illustrate the points made and suggests that other countries, such as the UK, may well be about to follow the same path.     

Is Homeownership the Answer? Housing Tenure and Indigenous Australians in Remote (and Settled) Areas

This paper examines the relevance of recently floated policy ideas for extending homeownership to remote Aboriginal Australians. It argues that while the housing tenure system in more densely settled Australia is dominated by homeownership, this is not, and cannot realistically be expected to be, the case in remote areas. The paper uses data from the 2001 Census, organized by remoteness geography, to demonstrate the different character of the housing tenure system in remote Australia. The paper argues that homeownership in remote Aboriginal communities is a somewhat unrealistic policy goal, given the underlying income and employment status of Indigenous people in these communities. The paper also argues that there are better measures of Indigenous housing need and disadvantage in Australia than low homeownership rates. It briefly reports on one past failed experiment in Queensland to introduce homeownership to a remote Aboriginal community.