Housing Ladder Research Articles

Locked In: Rate Hikes, Housing Markets, and Mobility

Rising interest rates in 2022 introduced large moving costs for homeowners with low, fixed-rate mortgages. Using a novel dataset linking mortgage loans, consumer credit profiles, and property sales, we examine the effects of rate hikes on household mobility and the broader economic impacts of the resulting mortgage rate lock-in. As market rates rise relative to those on borrowers’ existing loans, likelihood of moving falls with the highest elasticity among borrowers just “in the money.” Our results suggest about 44% of the decline in moves among mortgage holders between 2021 and 2022 may be attributable to the widening gap between borrower’s existing and market rates. We find limited scope for labor misallocation due to lock-in, as moves across labor market areas are rather unaffected. Instead, lock-in primarily reduces within-metro churn and moves up the housing ladder, leading to fewer real estate listings and greater house price growth. We explain lock-in-driven price increases through a housing search model: in a seller’s market, reduced churn raises market tightness, driving up prices. Consistentwith such a model, we show measures of market tightness increase in response to lock-in, with the most significant effects in markets that were already tight.

Inheriting housing inequality: Parental homeownership and place of origin as key factors for homeownership in Japanese metropolitan areas

The term “housing ladder” refers to the phenomenon of people moving from one housing type to another according to changing demands of different life stages. This phenomenon is observed in many countries and is known as the Jutaku Sugoroku Paradigm in the Japanese context. This study aims to clarify whether adult children's access to homeownership might be affected by their parents' homeownership and their place of origin. Questionnaire Data from a survey across Japan's two largest metropolitan areas, Tokyo and Osaka, were analyzed by combining crosstabulations and a binomial logit model. The results revealed that individuals are more likely to attain homeownership if they come from a metropolitan area and if their home of origin is an owner-occupied house. These findings suggest that housing inequality is being passed on to the next generation by parents' homeownership status and residential location. Japanese housing policies that promote private ownership of housing may reinforce these inequalities. The study concludes that Japan experiences the same intergenerational transmission of housing inequality due to homeownership as other countries, whereas place of origin was an additional factor for homeownership in the Japanese context.

Exploring Differences in Trends Between Private and Subsidised Housing Prices in Hong Kong

As different classes of residential dwellings, government-subsidised Home Ownership Scheme (HOS) housing and unsubsidised private housing are aimed at adjacent groups of households on the housing ladder in Hong Kong. Subsidised housing is in high demand, and one important way of meeting it is to have better-endowed HOS families move up by buying into the private market. The paper explores the differences in price trends between these two classes of properties and attempts to find some of their determinants. Empirical analysis of historical prices of HOS and private housing reveals higher volatility in HOS prices and a differing trend with private market prices, as well as many more HOS transactions after the implementation of the White Form Secondary Market (WSM) Scheme.

The receding housing ladder: house price inflation, parental support, and the intergenerational distribution of housing wealth in China

ABSTRACT China has experienced very rapid house price inflation in recent years – by some 10% per annum relative to consumer price inflation. Existing house-owners have benefited from capital gain and have been able to climb the housing ladder. Young household heads – wanting to own a house and facing rising house prices relative to their incomes – have found it increasingly difficult to get onto the housing ladder. However, their difficulty is eased by the strength of family support and the developing market for housing loans. The China Household Income Project (CHIP) surveys of 2002 and 2013 are analysed to test the hypothesis that the age distributions of house ownership and of housing wealth have moved against the young. Probits, tobits, and difference-in-difference analyses measure these effects. There is indeed evidence indicating a receding housing ladder, and evidence that waiting longer to own a house is positively associated with house price inflation.

Determinants of Housing Outcomes and Housing Expenditure in Non-Seoul Metropolitan Area and Seoul Metropolitan Area

This research aims to explore the commonalities and distinctions of housing outcomes and housing expenditure between non-Seoul Metropolitan Area (SMA) and SMA, and to identify the determinants of residential assessment and housing expenditure. Using two waves of the Korea Welfare Panel Study (KoWePS), this longitudinal study revealed that ageing and shrinking household size in two areas rendered a growing number of elderly, single-person, and female-headed households. The statistical findings showed that educational attainment of householders, labor force participation rate, and household income in SMA were higher and household size was larger than in non-SMA. As the ageing of non-SMA was faster than that of SMA, socio-economic disparities had widened over time. Further, substandard or inadequate housing conditions largely declined in non-SMA, and income growth backed by the rise in dual-income households enabled Chonsei tenants in SMA to move upward in the housing ladder, increasing satisfactions with housing and residential environment which were explicitly affected by such residential environment attributes as family life, social network and income. It’s notable that the dependence on social services in strong favor of cash transfers dramatically increased, and income became an important factor in predicting housing expenditure.

Residential mobility in Hong Kong 1991–2016: Demographics, policies and housing market dynamics

AbstractHong Kong has experienced rounds of property bubble inflation and burst, underscoring heightened market volatility amidst the financialization of the world economy. Irrespective of its fame as an exemplar of laissez faire capitalism, the city's massive public housing programme consisting of public rental housing (PRH) and the Homeownership Scheme (HOS) places the Hong Kong government among the world's biggest landlords and developers. It is within such varying and heavily manipulated choice sets that residential decisions in Hong Kong are exercised. Employing the past five population censuses (by‐censuses), this paper studies the city's changing scenes of residential mobility over the period 1991–2016, juxtaposing against changes in housing and land policies and the broader socioeconomic environment. The results reveal relatively frequent moves in the 1990s, but drastic and consistent declines in the mobility rates thereafter, especially for HOS and PRH residents. Private renters, however, stayed mobile throughout the 25‐year period. Such variations in trend point towards the recent dismantling of the housing ladder with PRH and HOS being major steps in the transition from private renting to owner‐occupation. Particularly affected are the younger generations. Expectedly, recent immigrants from mainland China fare less well in the housing realm. Nevertheless, with the attainment of the permanent resident status in Hong Kong, mainlanders and local born increasingly exhibit similar patterns of residential movements.

A Sustainable Housing Ladder

A Sustainable Housing Ladder

Housing careers and the Great Recession

This paper studies the housing careers of renters and homeowners before, during and after the Great Recession by using the concept of the housing ladder. Based on Dutch administrative data, we find that renters and homeowners were less likely to climb the housing ladder during the Great Recession than before and that these upward movement rates recovered to pre-recession levels afterwards. The negative recession effect was driven by a decreased probability of moving to privately owned housing. The decrease in the probability of house buying may be explained by low consumer confidence, housing price uncertainty and a limited supply of housing due to loss aversion.

Living in precarious housing: non-standard employment and housing careers of young professionals in Ireland

There is a growing understanding amongst researchers that traditionally defined linear housing career paths are becoming more difficult to follow, especially for young people. This seems to be particularly the case in the context of changing labour markets and the rise of flexible employment. In this paper we use the example of Ireland to demonstrate how non-standard and precarious work influences housing pathways of young professionals. Due to the employment circumstances, these ‘middle class’ workers are increasingly excluded from home ownership; they also experience difficulties in the private rental market. Consequently, they often rely on different forms of alternative housing arrangements. Such arrangements include prolonged sharing with friends and strangers, or moving back with parents. As a result, these young professionals tend to follow non-traditional housing pathways and are not able to move up the housing ladder. Their housing mobility, on the contrary, often consists of vertical or even ‘backward’ movements.

Homeownership attainment of adult children in urban China: parental attributes and financial support

Soaring homeownership and housing prices have made it more difficult for newcomers to climb the housing ladder without parental support. This study relies on China Household Finance Survey microdata in 2015 to examine the role of parental attributes (PA) and financial support on adult children’s homeownership attainment. Results show that, after controlling for covariates, parental lending for housing would triple the adult children’s odds of homeownership. Parental financial support plays a marginal role in maintaining homeownership. Adult children are more likely to transfer income to their parents than to receive, which is detrimental to the adult children’s homeownership. The relative importance of PA is secondary to that of parental support and the adult children’s institutional attributes—hukou status and access to housing provident fund. While the housing market is maturing, some advantages embedded in the socialist institutional arrangements have persisted. Young adults and rural migrants, who are burdened by financially supporting their parents, will struggle more in their housing careers.

Entry and exit affordability of shared equity homeownership: an international comparison

PurposeShared equity homeownership is a form of subsidised, resale-restricted housing through which lower-income households can sustain their affordability. This paper aims to distinguish two types of affordability within shared equity homeownership: “entry affordability” indicates how affordable subsidised housing is when a household first becomes a subsidised owner; while “exit affordability” means how affordable private housing is after a household has enjoyed subsidised homeownership for a period of time.Design/methodology/approachUsing price-to-income ratios, this study compares the entry and exit affordability of shared equity homeownership programs in Australia, Mainland China, Hong Kong, Norway, the UK and the USA. Based on these international comparisons, this study generalises two distinct types of shared equity homeownership models, namely, the models of “share-to-buy” and “share forever”. A new model, “follow-as-you-go”, is further suggested to increase the elasticity of potential affordable housing supply by providing incentives for existing subsidised homeowners to move.FindingsA key finding of this study is that while shared equity homeownership programs can improve entry affordability, homeowners’ exit affordability is weak when subsidised homeowners have to share their capital gain with the government. While many housing policy discussions around the world that support shared equity homeownership focus only on the improvement of entry affordability, these discussions usually ignore the importance of exit affordability. This study attempts to fill the void in the understanding of these two types of affordability.Originality/valueShared equity homeownership policy is not only about offering low-income households but also an affordable housing option. It is also about facilitating well-off subsidised homeowners to move up the housing ladder so that the affordable housing option can be freed up for others in need. In a word, it is not only entry affordability but also exit affordability that matters.

Housing career disparities in urban China: A comparison between skilled migrants and locals in Nanjing

The last two decades have witnessed a substantial growth of the owner-occupied housing sector in urban China, where most people tend to follow a conventional life course in terms of ascending the housing ladder towards homeownership. Yet, with skyrocketing housing prices in the real estate market, fragmentation in housing opportunities has become more important in reshaping the structure of social inequalities. This paper investigates the disparities in housing careers between skilled migrants and their local counterparts in Nanjing, focusing on temporal and spatial aspects. Specifically, this paper examines how skilled migrants’ housing tenure and location change over time, to what extent these changes differ from those of skilled locals, and what factors contribute to the disparities between migrants and locals. The results verify that there are indeed disparities in housing careers between migrants and locals, and the foremost difference lies in the tenure, especially the tenure of the first residence. Spatially, migrants exhibit an outward-bound pattern, often associated with the transition from renting to owning. These disparities in housing careers could be primarily attributed not only to the gap of the intergenerational transfer of wealth between migrants and locals, which can be traced back to regional disparities in economic development, but also to the self-selection of migration. While facing skyrocketing housing prices, the timing of making a foray into the housing market is pivotal. This study also revealed the diminishing marginal utility of education that is found in terms of establishing a superior housing career.

Housing careers, intergenerational support and family relations

The home and family have always been mutually embedded, with the former central to the realization and reproduction of the latter. More recently, this mutuality has taken on a more critical salience as realignments in housing markets, employment and welfare states in many countries have worked together to undermine housing access for new households. In this context, families have become increasingly involved in smoothening the routes of young adults members up the ‘housing ladder’ into home ownership. Intergenerational support appears to have become much more widespread and not just confined to familialistic welfare regimes. The role of intergenerational support for housing remains, however, highly differentiated across countries, cities and regions, as well as uneven between social and income classes. This introduction to the Special Issue explores how the role of housing wealth transfers has impacted the renegotiation of the generational contract. In doing so, it sets the scene for the articles that follow, each of which contribute significantly to advancing understanding of housing as a key driver of contemporary social relations and inequalities.

Heterogeneity in displacement exposure of migrants in Shenzhen, China

ABSTRACTLarge-scale residential displacement is occurring in many Chinese cities, with migrants living in ‘Villages in the City’ (ViCs) as the main groups affected. This study uniquely captures a situation in Baishizhou village in Shenzhen, where people live under a threat of imminent displacement. We elucidate the (social) heterogeneity of the affected population, their perceptions before and residential choices after displacement. Identifying four migrant groups, the two older generation groups (the first-generation labour migrant class and the new affluent migrant class) tend to anticipate severe consequences more than the two younger generation groups (the second-generation labour migrant class and the intellectual migrant class), mainly because the former groups are more economically and emotionally attached to the village. The residential choices of migrants (of all types) facing displacement increase housing demand in (remaining) ViCs in central urban areas, causing limitations to the absorptive capacity of cities for displaced migrants. Displacement occasionally enables displacees to climb the housing ladder; however, more often, it drives them further away from the city and places of work.

Slow but stable(ish) house price growth lies ahead

▀ UK house price growth is running out of steam. And with household incomes squeezed and the affordability of housing stretched, we think a prolonged period of very modest growth lies ahead. But the prospect of a crash is remote. ▀ At 2.6% in Q2 2017, annual house price growth is presently running at a four‐year low. This is a step change down from the recent peak of nearly 10% in mid‐2014 and average growth of 4% over the current economic expansion. ▀ Three developments are likely to lie behind this slowdown. The first is weak growth in households' real income, cutting the ability to save for a deposit or finance a move up the housing ladder. That said, past periods of sluggish income growth have not always been associated with low house price inflation. ▀ The second is the consequence of recent tax hikes imposed on buy‐to‐let investors and second‐home owners, which theory suggests should be capitalised in lower property prices. ▀ The third and perhaps most important reason is the increasing unaffordability of housing to an ever‐widening sub‐set of the population. The ratio of house prices to earnings is almost back at its pre‐crisis record. And the income of the average mortgage borrower is close to £60,000, more than double the average annual wage. ▀ This third factor has implications beyond price growth, suggesting both a permanently lower level of transactions and a further decline in the number of households with mortgages, continuing a trend which began at the beginning of the century. ▀ But set against these headwinds is the cushion provided by record lows for both mortgage rates and mortgage affordability. Overall, house prices are caught between a lack of traditional drivers of accelerating growth, but equally an absence of forces which have typically caused prices to fall. Hence, our expectation of a period of sluggish, but relatively stable, growth.

A Study on the Improvement Transforming Characteristics of the Revised Housing Benefit

본 논문은 지난 1여년간 개편된 주거급여의 제도적 특성은 무엇이며 그로 인해 변화한 결과, 그리고 한계와 미비점은 무엇인가를 밝히는 것이다. 제도 개편 후 주거급여는 지원 대상자의 범위가 확대되고 주거급여 보장수준도 확대되어 수급자의 임대료 부담 완화와 주거 수준 향상에 기여하였다. 그러나 당초 시행 전 예상했던 주거급여 수급자 97만 가구 목표 지원에 비한다면 실제 급여 수급자는 80만 가구여서, 제도 개편 전에서 비하여 10만 가구의 증가에 그치고 있다. 제도 개편의 가장 큰 목적 중의 하나였던 정책 사각 지대를 좁이는 문제는 아직 해결되지는 않고 있다고 볼 수 있으며, 탈주거빈곤문제도 과제로 남겨져 있다. 임차 급여의 임대료 부담 완화 효과는 있었지만 아직까지 수급자의 절반 가량이 임대료 과부담이라는 점에서 향후 임대료 부담 수준을 더 완화하는 방안이 필요하다. 또한 개편 제도의 시행 1년차에 사용대차 지급 원칙, 임차료 검증문제, 수선유지급여의 실시와 관려한 부분들이 제도적 미비점을 나타났다. 따라서 향후 주거급여는 이러한 제도적 미비점을 개선해 나가면서 주거급여 제도의 난해성, 임대료 부담 기준 부재, 열악한 거주 여건은 향후 주거급여의 성장과 발전을 위한 선결 과제라 할 수 있다. 공공협력형 주거급여 전달 체계는 보장기관과 전담기관간의 원활한 협력과 교류로 주택 조사의 범위를 넘어 수급자의 상향 주거이동 연계 지원과 탈주거빈곤을 유도하여 주거 자립화를 지원할 수 있도록 보다 강화할 필요가 있다.The purpose of this study is to examine the transforming characteristics of the housing benefit system that was revised with the introduction of customized benefit system and to investigate the revised housing benefit s changed effect and limitations over the past one year. The revised housing benefit system has redesigned for expanding the coverage of beneficiaries eligibility criteria, alleviating rent overburden and improving their housing quality. Though increasing the number of recipients over the past year, the number of recipients receiving housing benefit (800,000 households) falls short of the government target of 970,000 households. One of the main purposes of the revision was to reduce the blind spot of National Basic Livelihood Security System, but these transformation has done little to achieve that goal. Housing poverty is another problem to be solved. Although the revised housing benefit system has helped alleviate rent overburden for recipients to some extent, about half of the housing benefit recipients are still suffering the pressure of rent burden. Poor housing conditions did not also be improved. Limitations such as rent-free recipients, rent verification, and in-kind support revealed in the implementation. To resolve these issues, central government need to simplify the current housing benefit system, define affordable rent burden criteria, improve housing quality and institutional imperfections. In addition, local government and LH as authorized housing inspector involved in the delivery of housing benefit services should actively cooperate and communicate with one another for not only conducting housing investigation, but also assisting housing benefit recipients out of housing poverty and help them move up the housing ladder.

Barcelona’s got talent: migration, residential change and socioeconomic polarisation

The Barcelona City Council has, for the first time, provided to researchers the educational level of the population among the results of its register for migration and residential mobility. With these data, in addition to the well-known structure by age, sex and place of origin of migrants, it is now possible to know the educational profile of people arriving in the city and those moving within it. This is a key factor for understanding the processes of polarisation and social segregation in the city of Barcelona and its neighbourhoods. The data show that Barcelona has power, considerable power of attraction for a highly-qualified youthful population, but little power when it comes to distributing this population homogeneously among its neighbourhoods. The central part of the city is more attractive for the well-qualified population which is arriving, while hardly any of the less-educated population is moving into these neighbourhoods. Moreover, the internal residential mobility of the Barcelona inhabitants tends to perpetuate pre-existing socioeconomic differences in the city. The neighbourhoods of higher household income retain and attract more educated people, while lower-income areas retain and attract less-educated people with fewer chances of moving up the housing ladder. The combination of these dynamics is, then, contributing towards the process of socioeconomic polarisation in the city of Barcelona

Identifying the Benefits from Home Ownership: A Swedish Experiment

This paper studies the economic benefits of home ownership. Exploiting a quasi-experiment surrounding privatization decisions of municipally-owned apartment buildings, we obtain random variation in home ownership for otherwise similar buildings with similar tenants. We link the tenants to their tax records to obtain information on demographics, income, mobility patterns, housing wealth, financial wealth, and debt. These data allow us to construct high-quality measures of consumption expenditures. Home ownership causes households to move up the housing ladder, work harder, and save more. Consumption increases out of housing wealth are concentrated among the home owners who sell subsequent to privatization and among those who receive negative income shocks, evidencing a collateral effect.

Homeownership and housing consumption change in Urban China: Guangzhou under market transition

ABSTRACTHomeownership attainment is often seen as the first step in climbing the housing ladder and the building of wealth through acquisition of housing equity. While a number of authors have examined the issue of homeownership switch in China under market transition, the present paper is probably the first study on the extent of housing improvement in conjunction with and after the attainment of homeownership. Based on a household survey conducted in 2010, the study shows that ownership attainment in Guangzhou is generally accompanied by marked housing improvements, and subsequent moves bring further but percentage-wise much smaller improvements. While institution-related factors such as nature of work unit and occupational status might continue to be important, their effects on housing improvements are likely to be felt mainly through the income variable. But hukou status remains significant. More specifically, former peasants on the urban–rural fringe with claim to landownership rights have benefited most from the market-oriented land and housing reform.

The Toxicity of Conventional Debt An Islamic Antidote

Given the socioeconomic utility of a owning a house (being a consumption and investment asset at the same time), mortgage finance and markets has always remained a matter of interest for the policy maker. With the Global financial crisis claiming its roots in the subprime lending, wherein the word 'Subprime' owes its roots to the borrowers, inferior to the prime borrowers – i.e. the underprivileged borrowers, also known as NINJAs (no income, no job applicants) in the informal financial media. The main tool employed to get the subprime up to the housing ladder was Adjustable rate mortgage (ARMs). It is simply counterintuitive to believe that that smartest wizards of the most sophisticated financial markets in all their ingenuity, expected subprime borrowers, who cannot bear regular debt payment in the present, to pay higher-than-the prime borrower payment in future – as, implicated by this negatively amortizing loans. This paper explores the imperfections and risks in the conventional debt, and how Islamic Model of Home Mortgage alleviates it.