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City homeowners make 'better neighbours'

Homeowners living in city centres and the suburbs make better neighbours than those who live in less built up areas according to new research from LSE.

In the May issue of the Journal of Urban Economics Dr Christian Hilber suggests that a lack of available land for new housing developments in urban and suburban(1) residential areas helps create more stable communities where homeowners are able to reap the rewards of being 'good' neighbours. This makes them more willing to invest in these relationships in the first place.

According to his paper 'New housing supply and the dilution of social capital'(2), in built-up neighbourhoods with high levels of homeownership –  like the suburbs that surround larger cities –  the restricted housing supply prevents lots of new people suddenly moving in and undermining the social networks that have been established.

monopoly housesThe research compares the behaviour of people who own their own homes with those who rent. Homeowners in built up areas are more willing to invest in their neighbourhoods than private renters, in contrast to less built up areas where home owners are no more willing to invest than private renters.

Dr Christian Hilber, an urban economist, explains: 'This is pretty counterintuitive because we usually think of more rural rather than city communities as being close-knit.

'It takes time and energy to invest in the kind of relationships which help create a "community spirit" where people, for example, watch each others property, hold a neighbour's spare key or babysit for one another. In neighbourhoods with plenty of space for new housing developments, where newcomers can easily move in and put these arrangements under stress, it becomes less worthwhile for homeowners to invest in their communities.'

Homeowners in built up areas also benefit financially from investing socially in their communities because, as the area becomes more desirable, the restricted housing supply will mean that house prices are pushed up. In other less developed areas the effect is weaker since new houses can be built to meet a rising demand to live in an area.

Dr Hilber says: 'The idea that owning your own home automatically makes you a better citizen isn't true. Although the costs associated with buying and selling a house keep you more tied to a neighbourhood – and may prevent you from just "free-riding" on the efforts of others –  that's clearly only part of the story.

'Promoting homeownership to encourage people to be "better citizens" who are more involved with their communities doesn't necessarily work. In developed areas there is a positive effect to being a homeowner, so making a marginal renter a homeowner might be worth it. However, in less developed areas you can pour in as much money as you like subsidising people to become homeowners but it won't make any difference to the community.'

For his research Dr Hilber analysed the results of the US Social Community Benchmark survey(3) which looks at how connected people are to family, friends, neighbours and civil institutions at a local and national level. 

The survey shows that homeowners, on average, socially interact 30 per cent more than renters with their immediate neighbours in built up neighbourhoods. However there is virtually no difference between homeowners and renters in little developed neighbourhoods.

Friday 28 May, 2010

Notes to editors

(1) The research was conducted in the US. In this context more developed areas should be understood as cities and highly urbanised suburbs. Less developed areas are, for example, new towns at the edge of cities and rural towns where there is still plenty of developable land.

(2) A pdf of the paper 'New housing supply and the dilution of social capital' is available from the LSE press office

More information for journalists is available from the LSE press office

Contact: Sue Windebank, T: 020 7849 4624, E: s.windebank@lse.ac.uk|

 

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