The young and the restless: housing access in the critical years

Abstract

How do governmental housing policies affect the ability of young people to exit the parental home? This paper makes three claims. First and most important, governments that create accessible and liquid mortgage markets make it easier for young people to launch from the parental home. Second, even in those countries with more liquid housing markets, younger generations today still have an increasingly difficult time realising their preferences compared to prior generations. Third, increasing income and wealth inequality interacts with housing markets to create this uneven playing field both within and across generations. This paper examines these relationships in 20 high-income OECD countries. Fewer adult children live in the parental home in countries with deep mortgage markets, high levels of social rented housing, tax relief for ownership, low buyers' transaction costs and high residential mobility. These countries cut across the traditional housing regime typologies, highlighting the need for additional housing-specific theory building.