The Intergenerational Homeownership Gap across Europe: an Empirical Exploration of Explanations

Many studies indicate that the share of homeowners among young Millennials born in the 1980s is consistently lower across Europe than among Generation X, primarily born in the 1970s, at the same age. The reasons for this disparity – whether it rather stems from increased economic constraints (such as income, house prices, and mortgage costs) or a shift in preferences – remain unresolved. This analysis contributes to the debate by examining differences in homeownership likelihood between birth cohorts, focusing on "Generation X" and "Millennials" using crosscountry microdata from EU-SILC 2004-2020. We pool countries and years to estimate regression models for the probability of homeownership. We control for key sociodemographic variables, including age, employment status, income, and country fixed effects. If the effect of birth cohort remains negative and statistically significant, it suggests that part of the shift away from homeownership toward renting could also be driven by altered preferences. We find that significantly lower probabilities of homeownership for young Millennials remain even after controlling for a broad range of economic constraints. In the second part of the analysis, we estimate country-specific multivariate regression models to assess the variation in cohort effects concerning country-level variables (e.g., house prices and mortgage costs). We aim to determine if the intergenerational homeownership gap correlates with these economic indicators. Results show that correlations are statistically insignificant, again suggesting that factors beyond economic constraints contribute to the homeownership gap. Finally, results from a decomposition analysis suggest that later marriage and changes in household constellations (lower share of households with children) among Millennials explain the largest part of the intergenerational gap in many countries.