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Impacts of Housing Costs on Health and Satisfaction With Life Circumstances: Evidence From Australia

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  • Ashani Abayasekara
  • Jun Sung Kim
  • Liang Choon Wang

Abstract

This paper examines the causal impacts of rising housing costs on individual health and satisfaction with life circumstances, using a fixed‐effects instrumental variable approach and individual‐level panel data from Australia. Relying on the historical patterns of immigrant settlement, we construct an instrumental variable that exploits exogenous variation in housing costs driven by foreign investments that flow differentially into localities. We find that rising housing costs—as measured by composite housing costs faced by homeowners and renters living in an area—have a significant positive impact on individuals' self‐assessed physical health and a significant negative impact on satisfaction ratings, but no significant impact on self‐assessed emotional health. Heterogeneity analysis suggests that the positive effects on physical health are mainly concentrated among homeowners, the well‐educated, and older individuals.

Suggested Citation

  • Ashani Abayasekara & Jun Sung Kim & Liang Choon Wang, 2025. "Impacts of Housing Costs on Health and Satisfaction With Life Circumstances: Evidence From Australia," Health Economics, John Wiley & Sons, Ltd., vol. 34(4), pages 741-757, April.
  • Handle: RePEc:wly:hlthec:v:34:y:2025:i:4:p:741-757
    DOI: 10.1002/hec.4934
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