Longitudinal analysis of the formation and realisation of preferences to move into homeownership in the Netherlands

25-10-2012 | Publication

To what extent do individual characteristics and contextual circumstances influence the formation and realisation of preferences to move into homeownership? And which categories of aspiring homeowners find it more difficult than others to realise their preference to move into homeownership? These questions were investigated by using data from three cross-sectional housing surveys enriched with longitudinal register data over the 1998–2008 period. Tracing the residential behaviour of aspiring homeowners showed that only a minority of them had realised their preference to move into homeownership; this was particularly the case for those in a less favourable socioeconomic position.

Descriptive analyses showed that only a minority (35 percent) of non-homeowners who intended to move, preferred to move into homeownership. Only 31 percent of them became homeowners within 2 years, approximately 13 percent moved to rental homes, and the majority did not move at all. The results of a multinomial logistic regression of actual residential behaviour suggest that aspiring homeowners who are in a less favourable socioeconomic position, or who are searching for a home in an area where buying is relatively expensive, struggle to realise their preference to move into homeownership.

Hampering factors such as insufficient socioeconomic resources and a high house price-to-rent ratio are also important factors affecting the extent to which people prefer to move into homeownership. In line with the social psychology literature, people tend to adjust their tenure preferences to the perceived possibility of moving to an owner-occupied or rental home (‘adaptive preference formation’). People on high incomes, with a higher education or those who intend to move to an area where owning a house is relatively affordable compared to renting, are more likely to prefer to move into homeownership. Choosing between renting and owning a home is therefore not only a matter of preference, but is also clearly shaped by a framework of individually and contextually induced barriers. The finding that housing tenure preferences cannot be viewed as ‘pure’ preferences is not necessarily a disadvantage. In fact, constrained residential preferences may be useful to gain insight into how people assess their chances on the housing market and what types of dwellings they would choose if they were to move.