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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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Drivers of Homeownership Rates in Selected OECD Countries
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- Dan Andrews1, Aida Caldera Sánchez1
- Author Affiliations
- 1: OECD, France
- 18 Mar 2011
- Bibliographic information
Homeownership rates have increased significantly in many OECD countries over recent decades. Using micro-econometric decomposition techniques, this paper shows that part of this increase can be explained by changes in the characteristics of households, including age, household structure, incomes and education. Nevertheless, a significant portion of the change in homeownership rates remains unexplained by shifts in household characteristics, leaving a potential role for public policy in explaining developments in homeownership rates. Panel estimates suggest that the relaxation of down-payment constraints on mortgage loans has increased homeownership rates among credit-constrained households over recent decades, resulting in a rise in the aggregate homeownership rate that is comparable to the impact of population ageing. In countries where tax relief on mortgage debt financing is generous, however, the expansionary impact of mortgage market innovations on homeownership is smaller. This is consistent with the tendency for such housing tax reliefs to be capitalised into real house prices, which may crowd-out some financially constrained households from homeownership at the margin. The impact of housing policies regulating the functioning of the rental market, such as rent regulation and provisions for tenure security, on tenure choice is also explored.
- homeownership, mortgage markets, taxation, financial regulation, housing market
- JEL Classification:
- G21: Financial Economics / Financial Institutions and Services / Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- H24: Public Economics / Taxation, Subsidies, and Revenue / Personal Income and Other Nonbusiness Taxes and Subsidies
- R21: Urban, Rural, Regional, Real Estate, and Transportation Economics / Household Analysis / Housing Demand
- R31: Urban, Rural, Regional, Real Estate, and Transportation Economics / Real Estate Markets, Spatial Production Analysis, and Firm Location / Housing Supply and Markets