In which European countries is homeownership more financially advantageous? Explaining the size of the tenure wealth gap in 10 countries with different housing and welfare regimes

Barend Wind*, Caroline Dewilde

*Corresponding author for this work

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Abstract

Previous research consistently shows that homeowners accumulate more wealth compared with tenants. In this paper, we describe the size of this ‘tenure wealth gap’ for 10 European countries. Furthermore, we explain why the size of the tenure wealth gap differs between countries by including cross-level interactions between institutional variables and housing tenure in a series of country-fixed effects regression models. Cross-country differences arise as the costs of owning versus renting, as well as the profitability of homeownership versus other investments, differ along the lines of welfare policies and housing regime arrangements. We attempt to control for selection bias related to tenure status by using propensity score matching techniques, using data from the Household Finance and Consumption Survey (HFCS). Our findings suggest that the tenure wealth gap is largest in familialistic welfare states, in which marginalised tenants are unable to save, whereas homeownership is a family resource that provides an in-kind retirement income (‘passive’ asset-based welfare). We find smaller tenure wealth gaps in countries with a financialised promotion of homeownership, where housing wealth functions as a privatised welfare arrangement (‘active’ asset-based welfare). The smallest tenure wealth gaps occur in countries with more affordable rental housing, allowing tenants to accumulate savings.
Original languageEnglish
Pages (from-to)536-565
JournalInternational Journal of Housing Policy
Volume19
Issue number4
DOIs
Publication statusPublished - 2019

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homeownership
welfare
housing
assets
homeowner
retirement
profitability
finance
savings
income
welfare state
social policy
promotion
regime
resource
cost
regression
trend
costs
interaction

Keywords

  • ASSET-BASED WELFARE
  • HOME-OWNERSHIP
  • Housing wealth
  • OUTCOMES
  • POLICY
  • homeownership
  • life course
  • net worth
  • saving

Cite this

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title = "In which European countries is homeownership more financially advantageous?: Explaining the size of the tenure wealth gap in 10 countries with different housing and welfare regimes",
abstract = "Previous research consistently shows that homeowners accumulate more wealth compared with tenants. In this paper, we describe the size of this ‘tenure wealth gap’ for 10 European countries. Furthermore, we explain why the size of the tenure wealth gap differs between countries by including cross-level interactions between institutional variables and housing tenure in a series of country-fixed effects regression models. Cross-country differences arise as the costs of owning versus renting, as well as the profitability of homeownership versus other investments, differ along the lines of welfare policies and housing regime arrangements. We attempt to control for selection bias related to tenure status by using propensity score matching techniques, using data from the Household Finance and Consumption Survey (HFCS). Our findings suggest that the tenure wealth gap is largest in familialistic welfare states, in which marginalised tenants are unable to save, whereas homeownership is a family resource that provides an in-kind retirement income (‘passive’ asset-based welfare). We find smaller tenure wealth gaps in countries with a financialised promotion of homeownership, where housing wealth functions as a privatised welfare arrangement (‘active’ asset-based welfare). The smallest tenure wealth gaps occur in countries with more affordable rental housing, allowing tenants to accumulate savings.",
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