Open Access Journal

ISSN: 2183-2803

Article | Open Access

Is Property an Insurance or an Additional Burden? Financial Stress Among Homeowners in Europe

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Abstract:  A crucial function of wealth is to protect individuals from the consequences of adverse life events. However, sometimes wealth also implies additional financial risks. In addition to the insurance function of homeownership (the most common form of wealth), we therefore also examine financial squeezes that reflect the indebtedness and social embeddedness of homeowners and limit their options for dealing with social risks. A third hypothesis expects a trade‐off between social protection and homeownership. Taking the example of unemployment, we examine the effects of short‐term unemployment on the perceived financial situation of households based on data derived from EU‐SILC for 27 European countries. It can be shown that debt‐free homeownership reduces financial stress in the case of unemployment compared to tenants and indebted owners. A debt‐free home thus offers an additional buffer and insurance against the financial consequences of unemployment. However, indebted homeowners are particularly hard hit by unemployment because they have to use all their financial resources to pay off their mortgages. Finally, we did not find a trade‐off but a cumulation of advantages due to homeownership and generous unemployment benefits in countries with high net replacement rates.

Keywords:  financial stress; homeownership; mortgage; unemployment; wealth inequality


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© Martin Heidenreich, Sven Broschinski. This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 license (, which permits any use, distribution, and reproduction of the work without further permission provided the original author(s) and source are credited.