Elderly vs Working-Age Generation: Homeownership and Housing Asset Inequality in a Cross-Country Perspective

This study contributes to the discussion about wealth inequality, albeit from a more detailed housing perspective. It explores tenure inequality, as well as housing assets inequality. The latter includes a different approach than the one that prevails in the previous literature on wealth inequalities, which most often considers total net worth or net housing wealth. This study focuses on gross housing asset distribution, irrespective of mortgage debt, which corresponds with the potential of housing equity accumulation as a source of income in old age. It emphasises the intergenerational context, but simultaneously involves cross-country comparisons that allow for relative assessment of the intergenerational differences. Drawing from the Luxembourg Wealth Study (LWS) database the paper presents the results for fourteen developed countries. They suggest that the current working-age generation is to a lesser extent involved into homeownership, as compared to the older generation, which results in a smaller housing equity per household, but simultaneously it experiences greater housing inequality. Furthermore, as shown in a cross-country perspective, homeownership rates and housing asset inequality are negatively correlated. Consequently, higher housing asset inequality by lower homeownership rates are the factors that undermine the usefulness of the asset-based welfare concepts in a policy application. Such findings imply that in the macro perspective the potential of housing as a source of additional income in cash and in kind tends to shrink.