Risks in homeownership: a perspective on The Netherlands

The purpose of this paper is to explore the risk factors in homeowners from the individual household’s perspectives within the owner-occupied housing sector of The Netherlands. Risk in home ownership from mortgage providers’ perspectives has received tremendous attention than individual home owner’s perspectives in existing literature following the financial crisis in 2007/2008 within the euro zone.

The paper adopted a broader review of extent literature on the different concepts and views on risk in homeownership. These concepts are unified into a framework that enhances our understanding of the perceived sophisticated risk in owner-occupier with focus on The Netherlands.

From the perspective of the homeowner, two main types of risks were identified: default payment and property price risk. The paper has unearthed a quantum number of factors which underline the above risks. These factors relate to the initial amount of mortgage loan taken out, the future housing expenses and the income development of the owner-occupier. Family disintegration is identified, as one of the main causes of mortgage default and that of property price risk are mainly influenced by income levels, interest rates and conditions in the social and private rental sectors.

Findings of the paper are based on review of the extant literature in the context of the Dutch housing market. Possible rigorous situational analysis using other tools are recommended for further research.

This paper contributes to the much needed body of knowledge in the owner-occupied sector and provides a better understanding of risk in home ownership from the individual perspectives.