Authors: Ashani Abayasekara1, Jun Sung Kim2, Liang Choon Wang3
Affiliations:
1 Monash University Health Economics Group, Monash University, Melbourne, Australia
2 Department of Economics, Sungkyunkwan University, Jongno-gu, Republic of Korea
3 Department of Economics, Monash University, Clayton, Australia
The following is a summary of a research project by the authors. For more information, please see the published full-text journal article: https://doi.org/10.1002/hec.4934
At a time when Australia’s housing affordability is at the forefront of national debate, new research from Monash Business School has raised questions about the real cost of rising property values. The study, published in Health Economics, analysed almost two decades of data to uncover long-term trends in the relationship between housing costs, health, and life satisfaction. Researchers examined data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, covering close to 24,000 Australians from 2001 to 2019, using rigorous statistical methods to isolate the true impact of rising housing costs while accounting for factors like tenure status, age, and education levels. Physical health was assessed through mobility and general wellbeing indicators and emotional health through measures of mental health and vitality while life satisfaction was measured across eight key areas, including financial security, personal safety, and community belonging.
The study found that as house values climb, homeowners report better physical health but lower overall life satisfaction. While typically one might expect that as house prices rise, homeowners would experience increased happiness and life satisfaction, the researchers note that this may not be the case if those homeowners have long‐term plans to move to even better areas in the future. As house prices rise, homeowners may find it increasingly difficult to afford homes in their desired areas, potentially leading to frustration and reduced life satisfaction. The study also found that not everyone is affected equally by rising housing costs. Older homeowners and highly educated individuals tend to benefit the most, enjoying better health without significant declines in life satisfaction. By contrast, younger Australians, renters, and those with lower education levels experience the highest levels of dissatisfaction.
These findings have important housing policy implications. For instance, rising house prices shouldn’t automatically be seen as a sign of economic success – particularly when they come at the cost of widespread dissatisfaction and growing inequality. The findings also point to specific groups that require policy attention in the provision of affordable housing, including low-income renters and younger and lower-income homeowners.
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