Demographic Change and Retirement Planning: Comparing Households’ Views on the Role of Housing Equity in Germany and the UK

Abstract

As states across Europe come under pressure to meet the needs of ageing populations, there has been increasing interest in the potential role of housing equity in funding welfare provision. This paper draws on the findings of a European study, Demographic Change and Housing Wealth (DEMHOW), which set out to explore whether housing plays a role in retirement planning. This paper compares the views of homeowners in Germany and the UK. The former is a country where homeownership is the minority tenure and the preserve of affluent households, and where house prices have been stagnant for years. The latter is a country of homeownership where half the poor are home owners, and where real house price increases over many decades have served to establish the belief that homeownership is one of the best investments accessible to ordinary people. In addition, ‘equity release’ is more common, and related products better developed, in the UK than in Germany. Given these differences, it might be assumed UK homeowners would be more willing to consider utilising housing equity to supplement their income in retirement than their German counterparts. This paper sets out to explore whether this is the case.