Risks in homeownership

Abstract

Purpose
Risk in home ownership from mortgage providers’ perspectives has received tremendous attention than individual home owner’s perspectives in existing literature following the financial crisis in 2007/2008 within the euro zone. This paper explored the risks factors in homeowners from the individual household’s perspectives within the owner-occupied housingsector in Dutch housing market.

Design/methodology/approach
The paper adopted a broader review of extent literature on the different concepts and views on risk in homeownership. These concepts are unified into a framework that enhances our understanding of the perceived sophisticated risk in owner-occupier with focus on the Netherlands.

Findings: From the perspective of the homeowner, two main types of risks were identified: default payment and property price risk. The paper has unearthed a quantum number of factors which underline the above risks. These factors relate to the initial amount of mortgage loan taken out, the future housing expenses and the income development of the owner-occupier. Family disintegration is identified as one of the main causes of mortgage default and that of property
price risk are mainly influenced by income levels, interest rates and conditions in the social and private rental sectors.

Research limitations/implications
Findings of the paper are based on review of the extant literature in the context of the Dutch housing market. Possible rigorous situational analysis using other tools are recommended for further research

Originality/value
This paper contributes to the much needed body of knowledge in the owner-occupied sector and provides a better understanding of risk in home ownership from the individual perspectives.