In developed economies, housing is the ‘uber’ asset, influencing consumption and investment patterns broadly. Housing-related items (property taxes, rentals or mortgage repayments) or services (electricity and water, maintenance and repairs, and furniture purchases) typically account for a higher share of consumption expenditure than any other category.
Beyond shelter, housing also enables people to access services such as electricity, water and sanitation, which are critical for health and wellbeing.
In developed economies with high home ownership rates, housing and pension assets typically account for the bulk of assets on the household balance sheet. Households leverage this value to support investment in education and businesses.
Meanwhile, housing also underpins the liability side of the balance sheet, with mortgages dominating consumer credit markets. And it is via interest rates on variable rate credit dominated by mortgages, that central banks influence expenditure patterns in the household sector.
Housing also plays a critical role in city financing and budgets. Taxes on residential properties and service charges are a significant source of revenue, allowing cities to provide and maintain public infrastructure. On the basis of such infrastructure, cities are in turn able to support and attract even more economic activity, and deliver services that increase the benefits of housing to households, in a virtuous circle.