What do housing wealth and tenure have to do with it? Changes in wellbeing of men and women after divorce using Australian panel data

Abstract

Homeownership, as a way to build up housing wealth, is believed to play an increasingly important role in terms of providing welfare to citizens. However, homeownership does not always act as a nest-egg; it can be a source of financial anxiety as well. In this paper we investigate how homeownership and housing wealth impact on the relationship between divorce and subjective wellbeing (life satisfaction, happiness, financial satisfaction). Using longitudinal data for Australia we find that homeowners are more negatively affected with respect to wellbeing by divorce than tenants, amongst others because the owned house becomes a financial burden. We further find that gender moderates the impact of homeownership and tenure change upon divorce on wellbeing. When women move from an owned to a rented house, divorce has a smaller negative effect on happiness and financial satisfaction than when women stay in the owned house. For men, staying in the owned house or moving within the owner-occupied sector increases happiness, but moving to the rental sector from the owned house increases financial satisfaction. Furthermore, for men, housing wealth mitigates financial stress when remaining in an owner-occupied house after divorce. We conclude that the potential role of homeownership as a welfare resource – in this case for subjective well-being – seems rather limited to those who already possess other resources (e.g. financial security) and therefore cannot be expected to substitute more traditional forms of welfare.