Ebook: Housing wealth in retirement strategies
What is the current role of housing wealth in household retirement strategies across the European Union member states, and could this role be extended? This question is often raised by researchers and policymakers as governments search for ways to cut pensions expenditure. Owner-occupation could potentially be part of a solution as the retired are often rich in terms of housing wealth. The existing theory shows that owning one's own home can be regarded as a form of pension: once the mortgage has been repaid, housing expenses are substantially lower and housing wealth can also be cashed in, either by selling or using equity release schemes. However, converting housing assets into cash is a much less common strategy than expected. This book contributes to existing knowledge by relating household strategies to broader national contexts. The countries included in the study are Belgium, Finland, Germany, Hungary, Portugal, Slovenia, Sweden and United Kingdom, while the Netherlands is the subject of particular attention. The study suggests that owner-occupation is not the clear-cut solution that governments might have hoped for.
What a joy doing a PhD, being supervised by Marja Elsinga and Peter Boelhouwer, and having the opportunity to be part of a fantastic team of researchers across Europe. The six years at the OTB research institute have flown by and what I did not want to believe at first did happen: I transformed into a devoted ‘Housing System researcher’.
Part of the joy came from doing research: becoming more and more acquainted with the topic. I am fond of doing research and of enhancing my understanding of how the world ‘really’ works: how people think and behave, how systems function; and then being able to share my knowledge by presenting work at conferences and by writing journal articles. Doing research together with partners from different European countries, from different institutes was incredibly valuable. I feel very privileged that I was part of two big European projects in which the collaboration worked out so well.
Another part of the joy came from the topic itself. When I started my PhD I was really wondering who in the Netherlands would ever be interested in my work. Pensions in the Netherlands seemed safe and stable, retirees were relatively rich. House prices were steadily rising, although less rapidly than at the end of the nineties; no one believed they would ever fall. Trust in the government, pension arrangements, financial institutions and house price developments was high and purchasing a home was primarily about having a pleasant roof over one's head. Risks were almost absent from discussions about housing markets.
I still remember one of the first conferences I attended at which Janet Ford, professor in Sociology at that time at the University of York, was presenting work on the risks of owner-occupation, the risks of mortgage debts, and negative equity. I remember the reaction of a spokesman for the mortgage lenders who claimed that scientists should not emphasise the risks so much. Financial institutions were supposedly very experienced in calculating the risks, and scientists should not underestimate the knowledge of banks.
The landscape of course has changed dramatically since 2008. The global financial crisis started with housing: the subprime lending crisis. Millions of American low-income owner-occupiers could no longer manage to pay their monthly mortgage expenses, got into arrears, and were forced to leave their homes. House prices fell and the situation turned into a catastrophe. Banks where these households originally took out their mortgage had already wiped these mortgages from their books; they had been spread around globally to other financial institutions. It was the start of a much broader financial crisis that still today affects stock markets and housing markets. Pensions, already under pressure due to demographic changes, were given an extra shock by the crisis. Pension funds shrunk. Governments were faced with a different reality and had to reform their policies. Unemployment increased. Trust was no longer self-evident and households were forced to make an inventory of their financial resources.
In 2011, the relevance of being an owner-occupier and owning a dwelling outright in old age is high. Unlike retired tenants, retired owner-occupiers have reduced their housing expenses; and the value of their home represents a large amount of wealth which they can cash and consume if they wish to do so. The European Commission mentions facilitating mortgage markets to develop and introduce mortgages especially for elderly people as an option for national governments to ease some of the pressure on their pension systems. Also in the Netherlands, pension experts increasingly see the relevance of housing wealth for retirees and question whether not everyone in the Netherlands should become an owner-occupier. In short, while doing my PhD the topic of my research gradually became hot – and my knowledge felt increasingly worthwhile.
It is great to have a good topic for a PhD but this does not explain all the pleasure. I owe much to the people that have been around me. I wish to thank a great number of people who have been important for me over the years. To start with my supervisors: Marja, your style of supervision was very pleasant, you gave me freedom, trust and the encouragement I needed. You are an exceptionally hard worker, ‘begeistert’ when it comes to housing systems, you have inspired me. Peter, your role was less prominent, but when we needed you, you where there and contributed to the thesis. Thanks a lot for that. Peter Neuteboom, my mentor and first office-mate ever. Never again have I had such a cheerful, positive and restless person in my room: it was great to share a room with you. Anwen Jones and Deborah Quilgars, working with you was great; not only for the content but also for the good time after work and the countless email exchanges. Gudrun Tegeder, Ilse Helbrecht, Tim Geilenkeuser, Hannu Ruonavaara, Païvi Naumanen, Jószef Hegedüs, Nora Teller, Hanna Szemso, Srna Mandič, Pedro Perista, Eva Andersson, Pascal de Decker and pater familias John Doling; you are all fantastic people to work with and it was great to elaborate with you on our cultural peculiarities during the memorable OSIS and Demhow dinners.
At the OTB research institute, I need to thank my dearest PhD buddies: Janine Meesters, Evelien van Rij, Wiebke Tegtmeijer, Gwen van Eijk, Wendy Bohte and Eva Heinen. In the Housing Systems research group, Paul de Vries – our small talk in the morning made many of my days; Kees Dol – because of you, new people in the section feel very welcome; Christian Lennartz – thanks for bringing the fun, coffee and fruit in the office; Joris Hoekstra, Gerard van Bortel, Marietta Haffner, Harry Boumeester, Harry van der Heijden, Michael Oxley, Julie Lawson, Kyungho Choe, Joyce Koopman, Gust Mariën, Cor Lamain, thanks all for creating a truly pleasant atmosphere to work in. Jeanet van den Bos – you helped me incredibly with the interviews: thanks for that. Daniëlle Groetelaers, Bastiaan van Loenen, Sylvia Jansen, and Eveline Vogels, you contributed significantly to my good memories of the OTB.
Finally, I need to mention a few people close to me who are of the utmost
importance: Hugo – I love to share with you all the ups and downs in life. Your favourite role is to make the latter even more dramatic and then I cannot do anything else but laugh about it all over again. Suzanne, you are a very precious friend and support, and together with Marcel highly valuable to me. Bar and Thijs, in my view the two of you absolutely succeed in making a party of life, and I am ‘kei’-happy to be part of it every now and then. Mam, Pap and Jan Piet, our discussions are dangerous, but I love them: you are the best!
Now back to ‘business’: I have explained that my research topic became hot over the years, I became a devoted housing researcher, my PhD is finished, and you – the reader – can now start reading the result.