Why do we want to buy houses when we are so bad at saving money?

17 June 2018


David Douce
David Douce

The difficulties facing first-time home buyers are a big talking point at the moment, as house prices seem to be on the opposite trajectory to real wages.

Saving for a deposit is a major challenge, especially for those who don’t wish to involve parents, or who don’t have the opportunity to do so. Home ownership is an emotional issue, as is saving, and the strange thing is that money is hugely emotional in so many of its aspects.

While the broad purpose of money is to give us a cold, hard measurement of exchange value, we can’t help but pile in with our emotions. People even see lumps of their own money as having different emotional weights – inherited money from family is often protected in a way that income isn’t, for example.

But within all these complex attitudes towards money and homes, there do appear to be some peculiar national differences, which suggest that we learn ways of looking at money from our surroundings rather than them being inherent. Just taking a look at the international data on house ownership, some fascinating points emerge, which question the idea that every young person should aspire to own their home.

Home ownership doesn’t necessarily equal prosperity

Guess which country has the highest rate of owner-occupiers – Romania, at an astonishing 96.4%.

And then try guessing which has the lowest – Switzerland, at 43.4%.

In fact, if we exclude Hong Kong as being something of an outlier financially-speaking, it is weird to find that the three countries with the lowest owner-occupier rates in Europe are Switzerland, Germany and Austria, and all three are way up in the savings rates, the Swiss right at the top saving 18.79% of their disposable income, Germans 9.69% and Austrians 7.92%. The UK has a negative savings rate of -1.11%.

The situation in each of these countries is obviously unique, but these bits of data do raise a couple of worthwhile questions. Is home ownership necessarily what gives people a sense of well-being and security? Do Romanians really feel better off than the Swiss as a result of owning their homes? And why are the British so bad at saving? On the OECD figures, the only countries below the UK for saving are Greece, Portugal and Latvia, and we just about draw with Finland.

And if we’re so bad at saving, perhaps these habits and attitudes form from what we learn from our parents - like so many systemic issues. Should so many people be straining to buy their own home when maybe, like the Swiss, Germans and Austrians, we’d be more comfortable with a secure rented home and a lump of savings in the bank?

Perhaps the solutions to the housing crisis for the young are at least partially contained in our attitudes and emotions about money and property, rather than in tricky, and economically difficult, ideas of subsidising house buying.