Rising housing costs and income poverty among the elderly in Germany

Abstract

Housing costs have been increasing rapidly in Germany in recent years. Given the importance of housing for the elderly, one may expect many to be forced to dedicate ever-larger shares of their income to housing costs. Using longitudinal data from the German Socio-Economic Panel (GSOEP), we examine how changes in housing costs between 1996 and 2017 have affected income poverty among Germany’s over-65s. Our results reveal that higher costs have indeed contributed to increased income poverty in old age in that period. Our pooled probit regression models as applied to Germany’s elderly show that increased housing costs mean tenants, homeowners with outstanding mortgages, single-person households and people with migration background all suffer a higher risk of poverty, while the risk remains lower for outright homeowners. Since the relative income position of the elderly is expected to further deteriorate in future, our study suggests a need for policy action to avoid a worsening in figures for old-age income poverty in Germany.