Property-based welfare and European homeowners: how would housing perform as a pension?

Notwithstanding current market volatility, there has been exceptional expansion in owner-occupied housing sectors and increases in house prices across European countries in recent decades. In the EU, individual wealth held in housing equity, especially among older people, has been considered a substantial reserve that could be tapped into to meet future pension needs as the ageing of the population becomes a greater stress on European welfare states. This paper seeks to take the notion of ‘property-based welfare’ further by examining, in principle at least, how home ownership may function as a pension across EU states. This firstly involves very approximate estimates of the types of, and rates of, income homeowners could hypothetically generate from their homes, including forms of income in kind. Secondly, criteria are identified to estimate how ‘adequate’ such potential incomes are in relation to working incomes and in bringing retired households above poverty levels. Thirdly, different circumstances across EU member states with regard to existing housing and pension arrangements are examined. Broad national groupings appear evident, with housing income having least impact in older member states in central and northern Europe. The paper concludes that while the potential outcome of housing wealth is country specific, in many cases, greater dependency on home ownership in welfare provision, particularly if it is used as a substitute rather than a complement to existing arrangements, may have adverse consequences for many.