Final Report Summary - DEMHOW (Demographic change and housing wealth)
How much housing wealth do Europeans own?
The total amount of housing equity held by European households is founded on two trends: increasing home ownership rates and increasing house prices. In the case of many of the newer Member States, the increase in home ownership rates has occurred particularly since 1990, with the privatisation of their housing stocks, whereas, in many of the older Member States, it has been a long-term trend, stretching back over the last 50 years. The home ownership rate across the 15, pre-2004 Member States is currently around 64 %, and in the 10 Member States joining in 2004 around 67 %. Once age-related tenure rates are taken into account in many Member States even higher proportions of older people are owners so that by the time they reach retirement age perhaps some three quarters of European households own their own homes.
While the current economic and financial crisis has had a downward impact on house prices throughout Europe, the long run trend over recent decades has been for substantial real increases everywhere. What this translates into, in terms of an exact amount of housing wealth in each member state, is unknown. Rough estimates, however, indicate that the net value or equity of home owned properties, that is the gross value less outstanding loans, may currently be around EUR 13 trillion in the 15 older Member States, and almost EUR 2 trillion in the 10 Member States joining in 2004. Over the EU-25 as a whole, housing equity is some 40 % higher than total gross domestic product (GDP), the figure being particularly large in the newer Member States and in some southern countries, and lower in north and North West Europe.
Notwithstanding differences between countries, the general pattern is that European households have, in the past, tended to behave as if housing, whatever else it might mean to them, is a financial asset which is used like other financial assets: broadly, households save in the years during which they work, and use savings in retirement to supplement income from pensions.
The starting point of DEMHOW was the observation that macro processes of demographic change that are leading to an EU-wide shrinking and ageing of populations are accompanied by another macro process: the EU-wide changes to housing systems. The co-incidence of these two macro processes suggests the intriguing question of the extent to which home ownership provides a potential cure for some of the consequences of ageing populations, as well as contributes to the causes.
The overall aim of DEMHOW was, then, to investigate the ways in which, across Member States, demographic change and housing wealth are linked, and to use those investigations in order to contribute to policy making.
The project participants comprised 12 partners spread over 10 Member States; together, they are broadly representative of the range of populations sizes, approaches to welfare provision, financial markets and housing systems.
The total amount of housing equity held by European households is founded on two trends: increasing home ownership rates and increasing house prices. In the case of many of the newer Member States, the increase in home ownership rates has occurred particularly since 1990, with the privatisation of their housing stocks, whereas, in many of the older Member States, it has been a long-term trend, stretching back over the last 50 years. The home ownership rate across the 15, pre-2004 Member States is currently around 64 %, and in the 10 Member States joining in 2004 around 67 %. Once age-related tenure rates are taken into account in many Member States even higher proportions of older people are owners so that by the time they reach retirement age perhaps some three quarters of European households own their own homes.
While the current economic and financial crisis has had a downward impact on house prices throughout Europe, the long run trend over recent decades has been for substantial real increases everywhere. What this translates into, in terms of an exact amount of housing wealth in each member state, is unknown. Rough estimates, however, indicate that the net value or equity of home owned properties, that is the gross value less outstanding loans, may currently be around EUR 13 trillion in the 15 older Member States, and almost EUR 2 trillion in the 10 Member States joining in 2004. Over the EU-25 as a whole, housing equity is some 40 % higher than total gross domestic product (GDP), the figure being particularly large in the newer Member States and in some southern countries, and lower in north and North West Europe.
Notwithstanding differences between countries, the general pattern is that European households have, in the past, tended to behave as if housing, whatever else it might mean to them, is a financial asset which is used like other financial assets: broadly, households save in the years during which they work, and use savings in retirement to supplement income from pensions.
The starting point of DEMHOW was the observation that macro processes of demographic change that are leading to an EU-wide shrinking and ageing of populations are accompanied by another macro process: the EU-wide changes to housing systems. The co-incidence of these two macro processes suggests the intriguing question of the extent to which home ownership provides a potential cure for some of the consequences of ageing populations, as well as contributes to the causes.
The overall aim of DEMHOW was, then, to investigate the ways in which, across Member States, demographic change and housing wealth are linked, and to use those investigations in order to contribute to policy making.
The project participants comprised 12 partners spread over 10 Member States; together, they are broadly representative of the range of populations sizes, approaches to welfare provision, financial markets and housing systems.