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June 24, 2014

Dissecting High, Medium and Low Homeownership Rates

Global Homeownership Rates

Did You Know homeownership rates
are very high (80 percent or more) in former Eastern Bloc nations like Romania (97 percent), Slovakia (90 percent), and Bulgaria (87 percent) because a wave of mass privatization following the fall of Communism in the 1990s enabled families living in public housing to take title to their flats at little or no cost?

There are numerous reasons why different countries have different homeownership rates, not all of them tied to national prosperity. One reason is the lack of a universal global definition of a dwelling. Consequently, some analysts speculate the high homeownership rate in India (86 percent), would be lower if the Canadian definition were used.  Unlike India, a dwelling in Canada (69 percent) must have "permanent facilities" (i.e. heat, a fixed roof, door, windows and enclosed walls that protect from the weather) to be counted as a home. Another reason low homeownership rates are prevalent in several prosperous countries, including Switzerland (44 percent) and Germany (54 percent), is due to strong rent regulations and tenant protection laws that can make renting more economical than owning.

Another key homeownership rate driver is household demographics.  After looking at homeownership rates in more than a dozen developed countries between the mid-1990s and mid-2000s, researchers from the Organization for Economic Cooperation and Development concluded about a third of the change in Canadian and U.S. (65 percent) homeownership rates were driven by changing household characteristic (age, income, education, household structure).

Read other Did You Know? posts in our series to celebrate National Homeownership Month.

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