Channels from Housing Wealth to Consumption

This paper uses micro-data from two national panel surveys to analyze the flow of wealth from residential property onto households' balance sheets, where it is available for discretionary spending. The examples are Australia and the UK-two of the world's most entrenched nations of owner oc...

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Bibliographic Details
Published in:Housing studies 2013-10, Vol.28 (7), p.1012-1036
Main Authors: Ong, Rachel, Parkinson, Sharon, Searle, Beverley A., Smith, Susan J., Wood, Gavin A.
Format: Article
Language:English
Subjects:
Age
Australia
Borrowing
Consumption
Equity
equity borrowing
Expenditure
Home equity loans
Home ownership
Households
Housing
Housing equity withdrawal
Income
Life course
Mortgage markets
Mortgages
panel survey data
Real estate
Trading
United Kingdom
Wealth
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Summary:This paper uses micro-data from two national panel surveys to analyze the flow of wealth from residential property onto households' balance sheets, where it is available for discretionary spending. The examples are Australia and the UK-two of the world's most entrenched nations of owner occupation, both with relatively complete mortgage markets. We focus on the early 2000s, which set the scene for an unprecedented wave of housing equity withdrawal. We consider equity released through sales and through additional borrowing. The findings show that equity extraction overall is not only (or even) a function of higher incomes, greater wealth, and older age; rather it occurs across the life course and is linked to pressing spending needs. We draw attention in particular to the growing social and economic significance of in situ equity borrowing-a practice whose financial buffering effects may form a short-lived prelude, rather than a sustainable alternative, to trading on or selling up.
ISSN:0267-3037
1466-1810
DOI:10.1080/02673037.2013.783202