Inequities have been growing deeper between generations in recent years. The more obvious reasons for this have been the flexibilization of employment conditions for younger people and the reduction of welfare state support. More recently however, access to housing has come to play a particularly important role. Urban Geographer Richard Ronald and his research team have focused their attention on the growing inequalities between generations and the tightening bonds within families.
Many older households born in the post-war decades enjoyed cheap social housing or built up significant equity in their owner-occupied homes over their life-courses. By contrast, younger cohorts are finding it especially difficult to afford suitable independent housing and while expectations of family owned homes as reserve of wealth have increased, access to them has diminished. Should we respond to this new form of inequality and if so, how?
Since the 1970s, European governments have increasingly promoted or even subsidized the ideal of mass homeownership. Politicians of various colour came to embrace the idea that the spread of housing property ownership can make people more wealthy and less reliant on the state in meeting their welfare needs, especially in later life once the mortgage has been paid off.
Indeed, in the 1980s and 1990s socioeconomic inequalities derived from income were softened via house price inflation and the accumulation of housing equity among those who owned their own homes. Family housing property was thus increasingly recognized as an alternative to welfare state provision, often as a sort of ‘pension in stone’. The advance of globalization and financialization meanwhile, enhanced access to credit among a widening social class base. House prices and home ownership rates subsequently boomed.
In the new millennium, new housing market dynamics have come to the fore. On the one hand, mortgage conditions for new buyers have tightened and incomes have been affected by austerity measures and the shift to flex contracts. House prices, on the other hand, have continued to increase while the provision of social housing has been reduced. In many countries, home ownership rates have thus begun to decline for the first time, driven by diminishing access among younger adults in particular.
Urban Geographer Richard Ronald and his research team conducted a comparative study on housing and economic restructuring in the UK, the Netherlands, Germany, Italy, Japan and Romania, funded by the European Research Council.
They focused their attention on the growing inequalities between generations, but also the tightening bonds within families related to these shifts in society, the economy and housing and labour markets. How are realignments between these elements affecting the social fabric of our societies? And why do governments still develop policies that aim to increase housing prices and reduce non-market rents even though more and more people are struggling to pay these prices?
A significant divide is developing between older and younger adult cohorts in regard to housing careers, routes into adulthood and exposure to social and economic risk. Most postwar baby boomers have the majority of their financial equity in their homes, the value of which has grown dramatically in the last three decades. This has enhanced both material and subjective levels of security. Young people, however, face significant reductions in access to home ownership.
In the UK and USA, for example, the total ratio of home owning households has dropped from around 70 to 63 percent since the mid-2000s, with home ownership rates among people under 35 dropping particularly dramatically. Similar, but less extreme patterns are evident across Europe. Demand for private rental housing has subsequently boomed. This has driven rents up, which has also acted to undermine the capacity of younger renters to accumulate the financial resources needed to access home ownership. At the same time, more and more younger people are either staying longer in their parents’ homes (or are boomeranging back), or are sharing accommodation with friends.
The divide between generations also echoes within cohorts. Parental support and resources have become increasingly important to gain access to the housing market. Parents who are homeowners have more possibilities to provide this support.
Richard Ronald and his team warn policy makers about the effects of current housing policies: increasing inequalities between and within generations and potential generational conflicts.
Government responses to shifting housing and economic conditions have largely failed to grasp their impacts on conventional housing careers, nor have policies taken into account the role of housing assets in widening inequality. Governments do hold the instruments to reduce these inequalities and to provide affordable housing for all.
The research team’s findings have a salience with a board audience (‘everyone who lives in houses, rents houses, buys houses, have parents who own houses’) and have been communicated through a series of YouTube animations as well as other news, blogs and social media.
The team has also been sharing the discoveries with practitioners working in the housing field (housing corporations, developers, financial corporations, real estate agents etc.) through a number of articles published in both scientific journals and professional magazines.
The group has furthermore reached out to policy makers who are critical in developing infrastructure and policy that support the housing market. In a spin off project supported by the Dutch Ministry of Internal Affairs they specifically focused on the problems faced by starters on the Amsterdam housing market.