Impacts of macroeconomic policies on objective and subjective wellbeing: The role of housing tenure

Between 2005 and 2021, New Zealand house prices rose by 142%, partly driven by inflationary macroeconomic policies. This paper explores the extent to which higher property prices (i.e. house prices and rents) affect measures of objective and subjective wellbeing, and how these effects vary by housing tenure. We measure objective wellbeing using non-housing consumption expenditure (NHE) and subjective wellbeing through life satisfaction. Housing tenure types include private renters, public renters, outright homeowners, and mortgaged homeowners. Our empirical strategy estimates the effect of property prices on each wellbeing indicator by tenure type. We also identify contributions of monetary policy to property price developments. Using survey data from 84,732 representative households collected by StatsNZ, we find that, relative to outright owners, higher property prices are associated with a decline in NHE for each of private renters, public renters and mortgaged homeowners. In addition, relative to homeowners, renters report significantly lower life satisfaction as house prices rise, with heterogeneous effects depending on age, income and local house price: rent ratios. Our results indicate that macroeconomic policies, operating through the property market, can exacerbate wellbeing inequalities associated with housing tenure.