Do We Really Understand Home Ownership Rates? An International Study


April 11, 2004


Gwin, Carl R.
Ong, Seow-Eng

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This paper attempts to fill two gaps in the homeownership literature identified by Dietz and Haurin (2003): homeownership in less developed countries and the effects of race, ethnicity and income on tenure choice. We use United Nations data from 1993 and 1998 to offer a cross-country analysis of the determinants of homeownership rates. Consistent with the previous literature, this study confirms that 1. The price-to-rent ratio is an important factor in tenure choice and 2. Increases in income are associated with increases in the percentage of consumers who choose to own. However, these relationships seem to hold generally only for higher income developed countries. In contrast to the previous literature that finds race and ethnicity account for a significant portion of the differences in U.S. homeownership rates, this study finds no evidence that these determinants account for differences across countries. We investigate the rule of law and find it is closely correlated with income measures which may indicate that countries with stronger laws encourage higher homeownership rates. Finally, capitalist / (formerly) communist regime differences do not appear to explain cross country differences in homeownership rates. The paper offers insights from the international evidence for the potential of selected policies to increase domestic homeownership rates and identifies several avenues for future international homeownership research.



Homeownership Rates, Tenure Choice