ABSTRACT Housing asset‐based welfare has long been a key component of Australia's social policy. This resonates with a parallel literature identifying a trade‐off between homeownership and the size of nations' welfare states, wherein owner‐occupiers in smaller welfare states tend to come to rely on housing wealth to meet many of their welfare needs, especially in old age. While still important, homeownership's role in old age is beginning to be challenged by Australia's maturing superannuation system. Furthermore, rising real house prices and financial market innovation have made housing wealth a liquid asset that can support consumption throughout the lifecycle. We empirically explore this changing welfare role by measuring the impact of housing wealth on discretionary and non‐discretionary consumer spending, as well as differential impacts across the consumption distribution. Our findings show that housing wealth effects matter more at higher consumption percentiles and are not used to support non‐discretionary spending on groceries and medical items. We discover evidence suggesting that a maturing superannuation system is beginning to challenge homeownership's welfare role, especially as a support for non‐discretionary spending that is relatively important in older households' budgets. Our evidence suggests that homeownership's role as a pillar helping to support welfare needs should be revisited.
Wood et al. (2026) studied this question.