Housing wealth across countries: the role of expectations, institutions and preferences

Julia Le Blanc, Jiri Slacalek and Matthew N. White

No 3021, Working Paper Series from European Central Bank

Abstract: Homeownership rates and holdings of housing wealth differ immensely across countries. Using micro data from five economies, we estimate a life-cycle model with illiquid housing in which households face a discrete–continuous choice between renting and owning a house. We use the model to decompose the cross-country differences in the homeownership rate and the value of housing wealth into three groups of explanatory factors: house price expectations, the institutional set-up of the housing market and preferences. We find that all three groups of factors matter, although preferences less so. Differences in homeownership rates are strongly affected by (i) house price beliefs and (ii) the rental wedge, the difference between rents and housing maintenance costs, which reflects the quality of the rental market. Differences in the value of housing wealth are substantially driven by maintenance costs. JEL Classification: D15, D31, D84, E21, G11, G51

Keywords: cross-country comparisons; homeownership; house price expectations; housing; housing market institutions (search for similar items in EconPapers)
Date: 2025-02
New Economics Papers: this item is included in nep-dge
Note: 1111765
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Related works:
Working Paper: Housing Wealth Across Countries: The Role of Expectations, Institutions and Preferences (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20253021

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