Surprises and Housing Tenure Decisions in Great Britain

(1996) - John Ermisch, Pamela Di Salvo

Journal: Journal of Housing Economics
Link:: https://linkinghub.elsevier.com/retrieve/pii/S1051137796900133
DOI:: 10.1006/jhec.1996.0013
Links::
Tags:: #paper #Tenure #NCDS #Transition
Cite Key:: [@Ermisch1996]

Abstract

The paper models the transition rates between the three main housing tenures in Britain. ‘‘Surprises’’ like partnership break-up, acquisition of a partner, and spells of unemployment are found to have large impacts on tenure changes. Through their effects on these transition rates, variation in the rate of arrival of such surprises affects the ‘‘equilbrium’’ housing tenure distribution of people. The transition rate models are estimated using two sources of longitudinal data: the first four waves of the British Household Panel Study (1991–1994) and data for the 1958 birth cohort from the National Child Development Study, covering their housing experiences from the ages of 16–33.

Notes

“‘‘Surprises’’ like partnership break-up, acquisition of a partner, and spells of unemployment are found to have large impacts on tenure changes” (Ermisch and Di Salvo, 1996, p. 247)

“Over 90% of British households are either owner-occupiers (67%)or ‘‘social tenants’’ (24%).” (Ermisch and Di Salvo, 1996, p. 248)

“The NCDS data for the 1958 birth cohort suggest similar conclusions. Only about 3% of cohort members who initially became homeowners subsequently moved into social housing by the age of 33” (Ermisch and Di Salvo, 1996, p. 250)

“Among the members of the 1958 birth cohort who became an owner-” (Ermisch and Di Salvo, 1996, p. 250)

“occupier, the median age of first entry is 23.5 years.” (Ermisch and Di Salvo, 1996, p. 251)

“The median age for entry to social housing among 1958 cohort members who initially became social tenants was about 21.5.” (Ermisch and Di Salvo, 1996, p. 251)

“A higher monthly income in the household in which the person resided in the previous year increases movements in both directions between private rental housing and owner-occupation, with the impact of income on the inflow into owner-occupation being much larger” (Ermisch and Di Salvo, 1996, p. 258)

“Among people with complete histories, two-thirds became owner-occupiers, 24% went into social housing, and 9% had not entered one of the two major tenures.” (Ermisch and Di Salvo, 1996, p. 261)

“Among the tenure-switching owners, the majority moved into private rental housing (56%), 30% returned to live with parents, and the remainder moved into social housing. The majority of social tenants who switched tenure became owners (56%), and one-sixth returned to live with parents.” (Ermisch and Di Salvo, 1996, p. 261)

“Surprises like partnership breakup, acquisition of a partner and spells of unemployment are found to have major impacts on tenure changes, and we show that the rate at which these surprises occur, as exemplified in the divorce rate and the inflow rate to unemployment, affect the equilibrium proportions in different housing tenures, albeit slightly.” (Ermisch and Di Salvo, 1996, p. 269)

“The housing tenure distribution at any point in time reflects these underlying dynamic processes, which in turn respond to changes that people experience in their working and family lives.” (Ermisch and Di Salvo, 1996, p. 269)