Real estate ownership is decreasing, not only in Spain.

More than nine out of ten residents of Singapore are homeowners, making this country one of the highest in homeownership among the wealthiest nations, according to The Economist magazine. Singapore is a wonderful place to live. It is a rich, stable state that is virtually crime-free. The streets are clean. Singapore has long confirmed the conservatives' belief that homeownership makes people wealthier and happier. Lee Kuan Yew, the country's first prime minister, was a strong advocate of this and claimed it gives citizens "a stake in the country and its future." It is believed that Singapore's homeownership programs influenced Margaret Thatcher's "Right to Buy" scheme in the 1980s, which allowed Britons living in social housing to purchase their properties at reduced prices.

It may seem alarming that for the first time in a century, homeownership in the wealthy world is on the decline. However, the potential increase in the number of renters may not be such a bad thing. In Spain, the share of rental housing was 17.5%, while ownership was 76.1% in 2018, according to data from the National Institute of Statistics.

For most of the past millennium, property owners were primarily landowners and farmers working the fields. Then, starting in the mid-20th century, homeownership became more democratized. A combination of rising family incomes and government policies helped more people become homeowners. In most countries, homeownership peaked around the year 2000.

The United States has some of the most ambitious tax incentives for home purchases. Official estimates suggest that the government loses over $200 billion annually (more than 1% of GDP) by assisting tax-paying homeowners through policies such as mortgage interest deductions. Mark Zandi from Moody's Analytics notes that the assistance in obtaining mortgages provided by Fannie Mae and Freddie Mac, two government-sponsored enterprises that support a large portion of the country's mortgage market, along with the Department of Housing and Urban Development, amounts to about $9 billion each year.

Despite the tax incentives offered by countries to encourage home buying, the reasons leading to a decline in home ownership are becoming increasingly strong. One of these reasons is that young people are less interested in buying. Many millennials prefer to pay for a service, for usage. And here the private sector sees an opportunity. For example, the number of companies building co-living complexes with shared spaces, such as kitchens, gyms, or laundries, is growing.

Economic factors may also be another major reason for the decline in homeownership. Since the crisis, young people have been struggling to increase their savings for a down payment on a home. However, stricter regulation of mortgage markets since the global financial crisis, not just in Spain, makes it more difficult for young buyers to obtain financing. "Baby boomers," who are looking for ways to generate income from their savings, are becoming homeowners. Meanwhile, millennials are facing more challenges, especially in the U.S., where they have student debt.

It seems unlikely that the homeownership rate in the English-speaking world will ever come close to that of Germany (44%) or Switzerland (40%). Homeownership levels are the result of history and culture. Countries with a history of weak real estate price growth, such as Germany and Switzerland, have a lower percentage of homeowners because fewer people see buying a home as an attractive investment.

Politicians in the wealthy world lament the emergence of the "Generation of Renters." "Homeownership in the U.S. in the second quarter of 2016 was 62.9%, the lowest rate in 51 years," tweeted Donald Trump during his campaign. "We will restore the American Dream!" Boris Johnson, the Prime Minister of the UK, also expresses concern about the declining share of homeowners in his country.

However, a low level of homeownership does not necessarily have to be a cause for concern. First of all, owning a home is not necessarily a path to family wealth. In fact, the evidence that homeownership is beneficial for society is quite weak. For example, Romania likely has the highest homeownership rate in the world at 96%, but it also faces many social issues. Switzerland, on the other end of this spectrum, has a low crime rate and a high level of social trust.

Homeownership can also cause economic harm in more subtle ways. According to a study, homeowners with mortgage debt are 30% less likely to become entrepreneurs. The burden of significant mortgage debt can deter people from taking on greater risks.

As the rental market grows and the "Generation of Renters" strengthens, governments are making increasing efforts to improve the sector. Rent control is becoming an increasingly popular measure. London Mayor Sadiq Khan has advocated for limiting rent increases in the capital. Berlin lawmakers recently voted to freeze rents for five years. Paris reinstated its rent control system last year after abolishing it in 2017. Such local interventions are inappropriate. Rent control typically does not attract investment in new construction, which is the last thing many of these cities need.

Many politicians in English-speaking countries are paying attention to Germany. There, renting is not seen as second-class ownership. It's quite secure: the average rental period is between 11 to 12 years, compared to 2-3 years in the UK.

Repeating the German experience will be difficult. In Germany, property owners treat tenants well not just out of politeness, but also because they have the property to do so. In recent decades, Germany has seen almost no increase in real estate prices. Since it's hard to make money on investments, the best hope for German owners is to keep tenants for as long as possible.

Spain aims to provide stability for tenants through longer lease terms. New Zealand is implementing regulations to ensure compliance with certain basic standards for rental housing.

However, the most promising development is the increasing investment from the private sector in the rental market. Since 2010, global institutional investments in residential real estate have doubled in real terms, not only because investors are seeking higher returns in a world of low interest rates, but also because the number of potential clients is growing.