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Homeownership and Wealth in Switzerland and Germany

Aufsätze in Sammelwerken 2018

Ursina Kuhn, Markus Grabka

In: Robin Tillmann, Marieke Voorpostel, Peter Farago , Social Dynamics in Swiss Society : Empirical Studies Based on the Swiss Household Panel
Cham: Springer
S. 175-185
Life Course Research and Social Policies ; 9


Property wealth represents the most important wealth component in nearly all OECD countries. Homeownership is linked to wealth accumulation in several ways: Wealthier households are more likely to buy a house or apartment, home owners tend to save more and rising house values typically yield higher returns than money in a bank account. Moreover, owners can borrow on a mortgage to finance, e.g., the formation of an enterprise or other economic activities. At the aggregate level, these relations can explain why countries with low rates of homeownership tend to have a high wealth inequality.This paper looks at wealth and homeownership in Germany and Switzerland. These countries show the lowest proportion of owner-occupiers in Europe and a high wealth inequality. We analyse to what extent this high inequality can be explained by homeownership status. In the first part of this contribution, we review explanations for the low share of owner-occupiers in the two countries. In the second part, we analyse wealth and homeownership empirically using data of the SHP and the German Socio-Economic Panel (SOEP) from 2012. We make use of decomposition methods to analyse how renter and owner households differ in wealth levels and wealth inequality.

Markus M. Grabka

Board of Directors SOEP & Acting Division Head in the German Socio-Economic Panel study Department