Second homes in Europe: positioned in the trade-off between homeownership and the welfare state

In some countries, up to 30% of the households owns a second home. However, the variation across Europe is large. Generally, second homeownership concerns holiday homes close to lakes, seas or skiing slopes, or apartments in... [ view full abstract ]

In some countries, up to 30% of the households owns a second home. However, the variation across Europe is large. Generally, second homeownership concerns holiday homes close to lakes, seas or skiing slopes, or apartments in urban areas, purchased as pied-a-terre or as buy-to-let property. However, the meanings and practices of second homes are context-dependent. The increase of second homeownership across Europe can be placed in the upswing in homeownership since WWII, although the reasons for the purchase of different types of second homes vary between countries. However, the investment motive has gained importance due to the financialization of housing, starting in the 1990s. Housing wealth is increasingly recognized as a separate dimension of socio-economic stratification, but the impact of second homeownership on the distribution of housing wealth is never researched in an internationally-comparative fashion. The role of second homeownership in individual wealth portfolios is expected to differ across institutional contexts. In this paper, we investigate the distribution of second homeownership across different social groups. Furthermore, we show the impact of second homeownership on the housing wealth of these groups. In doing so, we shed light on the tradeoff between homeownership and the welfare state. We argue that second homeownership has become a common strategy to buffer life course risks like sickness and old-age for those who are poorly covered by the welfare state (especially the growing group of self-employed). Since and ever-larger part of the European population is poorly covered by the welfare state, the rise of second homeownership might eventually impact upon the welfare state itself. The empirical analyses of this paper are based on the Household Finance and Consumer Survey (HFCS) of the ECB (2010/2015) and the fourth and the fifth wave of the Survey of Health Ageing and Retirement in Europe (SHARE) (2011/2013).