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Ebook: Home ownership. Getting in, getting from, getting out. Part III
This book provides an overview of the effects of home ownership, a housing sector that has grown rapidly in recent years in many countries, not least because this is normally encouraged by governments. The first part of the subtitle, ‘Getting in’, refers to processes in the development of the homeownership stock including problems of access, which in turn implies issues of affordability, the viability of financial institutions and subsidies. ‘Getting from’ indicates that this form of housing tenure may provide households with advantages such as wealth accumulation and independence that may not be available to tenants. Finally, the last section ‘getting out’ refers to the risks associated with home ownership such as the fact that their tenure positions may be founded on their ability to meet loan repayments. This publication is a follow-up to Home ownership: Getting in, getting form and getting out, parts I and II, and is a result of the conference ‘Building on home ownership; housing policies and social strategies’ in Delft, organized by the ENHR working group Home ownership & Globalisation and hosted by OTB Research Institute for Housing, Urban and Mobility Studies, Delft University of Technology. Part III provides an overview of the most recent research results in this field.
This is the third in a series of what started out in 2005 as a one-off. Then, a set of papers delivered at a workshop – run by the newly-formed ENHR working group on Home Ownership and Globalisation, and itself part of the annual ENHR Conference held in 2004 at the University of Cambridge – were revised and included in an edited volume. The chapters were organised sequentially so that they fitted with the three parts, themselves sequential, of the books subtitle.
Getting in referred to issues of access to home ownership which in European countries, and indeed elsewhere, is dominated by the high cost relative to average incomes. The chapters under this heading thus considered the financial costs facing households, the role and activities of financial institutions that lent money to the households for purposes of house purchase and the involvement of governments in facilitating access.
Getting from referred to the benefits that households may derive from their position once they have become home owners, these, including psychological well-being, social status and financial wealth, set owners apart from renters.
Finally, Getting out referred to the movement of households out of home ownership where this has been precipitated by financial difficulties, perhaps driven by unemployment or loan interest rate increases.
The Home Ownership workshop run as part of the annual ENHR conference held in Reykjavik in 2005, also contained many excellent papers. Moreover, they also seemed to fit into the same framework so that when the decision was taken to produce another edited volume the obvious course of action was to use the same title and subtitle, adding Part II to distinguish it from the first one.
In November 2008 two of the editors, Marja Elsinga and her colleague, Richard Ronald – both Research Institute for Housing, Urban and Mobiliy Studies (Delft University of Technology) – organised a conference entitled Building on Home Ownership: Housing Policies and Social Strategies. Over the course of two days a number of researchers from Europe and beyond came together to present papers discussing the results of their research. The decision, with John Doling, who is one of the Working Group co-ordinators, to edit some of the papers and include them in another volume, brings us to Part III.
The fact that the same subtitle remains appropriate as a way of organising the chapters is a testament to its generalisability, particularly given the very great changes, over the period from the first to the latest of the volumes, to the context within which home ownership is located.
At the time of the Cambridge conference there had, in most European countries, been a protracted period – up to a decade or so – marked by economic growth in which output grew, employment was generally high and house prices increased. Given this context, the general issue of getting in concerned the growing numbers of European households who, seeming to want to become home owners, being supported by higher wages and frequently being encouraged to do so – for example through tax breaks – by their governments, were together contributing to the expansion of home ownership sectors. Even so, rising prices meant for many that getting in required a larger financial commitment. But the commitment appeared to be worth it in terms of getting from, since it seemed likely to result in even higher prices and therefore positive investment returns. Apart from anything else home owners were acquiring larger financial assets and with them greater financial well being.
The same macroeconomic environment also characterised the time, 2005, of the Reykjavik conference so that the prospects for home ownership and home owners continued to be favourable. Getting from therefore continued to be an important part of the home ownership picture.
But by the time of the third conference, held in Delft in 2008, the context had changed dramatically. Although the scale and significance of the economic downturn being experienced in all countries of the world was not then apparent, the fact that it was severe and would have far-reaching impacts, not least with respect to housing markets, was clear. Moreover, it was also apparent that home ownership was at the root of the economic downturn, as well as being one of the sectors in which it was being experienced. What turned out to be the selling, on a mass scale over some years previously, of housing loans to households who, even in a benign environment would be unlikely to be able to repay them, eventually resulted in enormous losses to financial institutions. Because this affected their ability to provide further loan finance for housing fewer people have subsequently been able to enter the market, demand has fallen, followed by falling house prices. Moreover, because financial institutions have also been less able to provide finance to other sectors, economic development in general has been adversely affected with consequent falls in demand for goods and demand for labour, resulting, among other things, in more people who are unemployed and unable to meet housing loan repayments. In combination, this brings getting out into a more prominent position. What home owners are likely to get from their tenure position is now less favourable, while their statistical chances of being forced out has increased.
Of course there is always a time lag between the reality of the present and research outputs. Many of the things that housing researchers decide to research will be guided by what they see around them in terms of trends and phenomena. But, translating that into research action will depend first on available time and opportunity, both of which may be dependent on funding. For its part, the research action, the theorisation and the empirical study, will also take time. One consequence is that many of the papers delivered in Delft reflected the former, pre-2007, world of growth and optimism, rather than the post-2007 world of decline and pessimism. Getting in, getting from and getting out are thus all represented here.
John Doling, Marja Elsinga and Richard Ronald