Home ownership under changing labour and housing market conditions

Abstract

Increasingly, policy-makers regard flexible labour as a condition for a well-functioning economy, while they also tend to regard home ownership as the superior tenure. These two goals appear to be contradictory, as mortgage lenders prefer clients with a permanent, uninterrupted income stream. For the Dutch context, multivariate analysis shows that flexworkers on temporary/zero hour contracts have smaller chances of moving into home ownership than those on permanent contracts. They also tend to express less preference for home ownership. Because flexworkers often experience spells of unemployment, risk aversion appears to play a role. Our findings show, in the Netherlands at least, that self-employed freelancers do not experience too many problems in accessing home ownership, possibly because of more stable and higher incomes. However, the role of flexible labour is on the rise and policy-makers might consider methods to promote access to home ownership, ranging from mortgage guarantee schemes to mortgage payment insurances. Our research findings may not always be valid for other countries because of international variation in institutional arrangements, such as unemployment benefits, mortgage insurance and guarantee schemes, etc., but, nonetheless, sheds considerable light on this policy issue.