“The Really Big Trade‐Off” between Home Ownership and Welfare: Castles' Evaluation of the 1980 Thesis, and a Reformulation 25 Years on

Abstract

25 years ago, on the basis of very general statistics I argued that countries with high rates of home ownership tended to be countries with poorly‐developed welfare states. Nearly 20 years later, in 1998 this thesis was tested by Frank Castles who, using more sophisticated statistical techniques and a larger number of countries, found the thesis to have some validity. He dubbed the phenomenon “The really big trade‐off” between home ownership and public welfare. Dualist rental markets are structured by the state to prevent non‐profit rental organisations from competing on the open market with profit providers. This is done by segregating the former into a command economy public rental sector, thereby creating two forms of rental tenure. In integrated rental makets non‐profit are encouraged to compete with profit renting on the open rental market (see Kemeny, 1993 and 1995) Both the original thesis and Castles' analysis are reviewed, and a way of testing the thesis a quarter of a century after its formulation is proposed. It is argued that if those countries that still today enjoy a functioning integrated rental market and have low rates of home ownership begin to experience major declines in welfare – especially among the elderly – we can expect them to begin to transform into monotenural home owning societies. Sweden is taken as an illustrative example of a country with potential for such a transformation. Housing researchers will hopefully monitor such changes in all countries with integrated rental markets to see if declines in welfare can explain increases in home ownership as a means of coping with poverty and ill health in old age. But more important, housing research needs to broaden its focus from housing studies to relating housing to broader issues of welfare and society.