More New Homes – But Not More Home Ownership

Ever since Margaret Thatcher gave council tenants the Right to Buy in 1980, it has become a deeply-held tenet in British politics that boosting home ownership is a good thing. Yet, after more than two decades of politicians encouraging Brits to take the plunge and invest in a roof of their own the result is a deeply divided society. But even aside from the gulf between the haves and the have-nots in our property-owning democracy, there is intriguing and alarming new evidence that, in economic terms, a high level of home ownership may not in itself be a good thing – indeed, quite the reverse.

A research paper based on data across US states over time finds that areas with higher home ownership tend to have higher unemployment. The effect is large: over time, a doubling of the rate of owner-occupation is eventually followed by more than a doubling of the unemployment rate – and similar results were found in a separate study on Finland. Read more on the Observer website.