Generation rent and the financialization of housing: a comparative exploration of the growth of the private rental sector in Ireland, the UK and Spain

Abstract

This article analyses the growth of the private rental sector over recent years through a comparative analysis of three classic homeowner societies: Ireland, the UK and Spain. The article argues that theories of financialization provide a useful framework for understanding ‘generation rent’. In particular, the cyclical nature of credit markets tends to undermine homeownership over the medium term. This contributes to and intensifies the wider set of policy changes associated with neoliberalism. The article also accounts for the divergent experiences of our three case study countries within their common trajectory. It does so through an analytical focus on the interaction between global aspects of financialization and more nationally based ones, such as mortgage markets, as well as on how both are mediated by national policy regimes. The article thus aims to contribute to the emerging literature seeking to explain ‘generation rent’ and explore its significance, and more broadly to political economy approaches to housing system change.

Keywords:

• Generation rent
• private rental sector
• global financial crisis
• homeownership
• housing system change
• financialization

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 100% mortgages were introduced around 2004. They increased from 4% of new mortgages granted in 2004 to 12% in 2008. Mortgages with terms of 30 years or more increased from 10% of all mortgages to 39% over the same period (Norris & Coates, 2014).

2 Source: Housing Statistics in the European Union.

3 Source: Authors’ calculations based on data from the Department of Housing, Planning and Local Government (Various Years); Department of Social Protection (Various years).

4 In 2017, almost a decade into the crisis, 18 cent of Buy-to-Let mortgages were still in arrears. https://www.centralbank.ie/docs/default-source/statistics/data-and-analysis/credit-and-banking-statistics/mortgage-arrears/residential-mortgage-arrears-and-repossessions-statistics-december-2017.pdf?sfvrsn=4.

5 The Irish government legislated for the establishment of REITs in 2013 (Waldron, 2018).

6 Although opinions vary, Ball (2011), for instance, argues that it is too early to extrapolate long-term trends from the development of recent years.

7 The figure when we exclude London is 12.4%. Source: Office of National Statistics. Available here: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/may2018.