Factor Detemine Age and House Tenture

The first factor determine the relationship between age and house ownership is life cycle.

The life-cycle factor posits that households will smooth their consumption over time, implying that they will save part of their income and accumulate assets during their working lives and draw down on these assets once entering retirement. It would be expected that the level of saving and asset accumulation would peak late in their working life in line with peak income.

Thus, on the basis of the life cycle, we would expect that the house ownership would increase across households of working age and start to decline once households enter retirement. This is confirmed in Figure 1 which shows house ownership across different age groups.

Because property is lumpy, its ownership generally requires households to acquire debt to enable its purchase. Thus, while purchases of property may occur in the early stages of the working life of households, these households will generally take on debt which will thereafter be repaid up until the latter stages of their working life. For housing debt, both the propensity to hold debt and the gearing ratio on property would be expected to fall for households in the prime working-age groups and in retirement.

The second factor is Affordability. This encompasses earning capacity, note that the income and wealth required to obtain mortgages have a significant influence on the attainment of home ownership, with Jones (1989) noting that the wealth required for down payment appears to be more important than income in the transition from renting to home ownership.

Households may be expected to trade up their housing to cater for children and trade down once children leave the home and the parents enter retirement. With the demand for larger houses associated with larger families, households may be more interested in owning their own home, since the benefits of owner-occupation, such as benefits from capital gains tax exemptions, will be...