High levels of unemployment and reduced labour mobility are strongly linked to high levels of property ownership, according to a new study.
The research entitled, "Does High Home-Ownership Impair the Labor Market?" was conducted by academics Andrew Oswald and David Blanchflower. It looked at US data going back to the 1950s and found that "rises in home-ownership in a US state are a precursor to eventual sharp rises in unemployment in that state."
Doubling home ownership in a state can lead to more than doubling of the jobless rate, but since this is a very gradual process little is known about it, according to the study.
"I have become convinced that that by boosting home ownership we have ruined our labour market," said Oswald.
The research may go some way to explaining why Spain, with a home ownership rate of 80%, has an unemployment rate of 25%, while Switzerland with a 30% ownership rate has a jobless rate of just 3%, he added.
High levels of home ownership could harm the labour market by deterring people from moving in search of work, a task that is time consuming and expensive.
A long commute might discourage a householder from accepting a particular job the research suggested.
Another explanation is that home owners are opposed to new businesses being set up in their area, a behaviour widely known as "not in my back yard" in the UK.
Oswald went on and said that the correlations in his research should worry politicians that encouraged home ownership through subsidised mortgages and tax breaks.
"In Britain we have incredibly cheap mortgages and we're giving help-to-buy-scheme inducements on top of that in a world where house prices are already rising far above the rate of inflation that the Bank of England says it wants. It's unbelievably illogical," he said.
Blanchflower, who conducted the research with him, is a professor of economics at Dartmouth College and used to be a member of the Bank of England's Monetary Policy Committee.
Oswald is an economics professor at Warwick University.