Homeownership rates: A global perspective

The rate of homeownership is often used as a measure of the quality of a country's housing finance system. For example, it is often argued that the U.S. housing finance system is superior to the German system by virtue of the fact that there is a 27-percentagepoint difference between American and German homeownership rates. Upon closer analysis this comparison encounters obstacles, because Mexico and India, where housing is inferior in quality and availability in comparison to the U.S. and Germany, both boast homeownership rates of over 80%.

This paper will argue that homeownership rates are not the only indicators of the quality of a housing finance system because they are not defined and measured consistently from one country to the next. It also demonstrates the impact of demographic trends and legal and government policy on homeownership in various countries. This paper will argue further that the quality of housing finance systems are more accurately compared in terms of the extent to which they minimize the cost of housing, improve access to funds, enable consumers to predict payment amounts, and allow borrowers to easily refinance.