Renters often have a better life than homeowners, but this is not always the case. It does matter if you have a mortgage

For many years, home ownership has been considered the Australian Dream. Individually, it is seen as a path to success and adulthood. For the nation, it is seen as an important cornerstone in economic and social policies.

This assumption implies that people are better off if they own a house rather than rent one.

We can now examine this assumption using data from the funded Household Income and Labour Dynamics of Australia survey. For two decades, HILDA has asked both questions about homeownership and life satisfaction.

The question poses is:

How satisfied are you? Choose a number from 0 to 10 that represents your level of satisfaction.

We also asked people about their satisfaction with their finances, their homes, and their neighborhood.

In a recent study published in the Journal of Urban Studies, we correlated these answers with home ownership as well as characteristics such as age and income.

We found that homeowners are generally happier than renters. We also found that the degree to which homeowners were more satisfied with their lives depended upon whether they still had a mortgage.

Renters and mortgaged homeowners are both satisfied with their homes.

Renters were only half as likely as outright homeowners to feel high satisfaction. Homeowners who are still paying a mortgage feel more joy.

Mortgaged owners are only 1.1x as likely as outright owners to be satisfied with their finances.

The differences in satisfaction with home and neighborhood were not as extreme.

Mortgaged homeowners are 2.8 times more likely than renters to be satisfied with their home.

Mortgaged owners and outright owners are both more likely than renters to be satisfied with their neighborhood.

Results also vary with age and income.

As shown in the graph above, outright owners were more likely to report high financial satisfaction than renters across almost the entire age range.

Mortgaged owners showed only a greater level of financial satisfaction than those between 25 and 50 years old.

After age 50, the presence of mortgage debt negated any financial boost that homeownership provided. This could be a reflection of the increasing financial strain that comes with making mortgage payments when retirement is near.

By income, mortgaged owners reported experiencing more financial satisfaction compared to renters, the more they earned between A$80,000 and A$240,000. Outright owners experienced more financial joy than renters, up to A$320,000.

Owners did not experience greater financial satisfaction beyond these income levels than renters. This may be because high-earning tenants have other sources of happiness.

What people say about their satisfaction after 60

Renters and outright homeowners also showed similar patterns. They became more satisfied with their home as they aged, up until 60. As shown below, their satisfaction declined relative to renters at that age.

The increasing physical burden of owning a home may be reflected in this decline.

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