At a time when housing affordability is at the forefront of national debate, new research raises major questions about the real cost of rising property values.
The research from Monash Business School’s Department of Economics uncovers a surprising side effect of Australia’s property price boom: rising house values are linked to better health.
But before homeowners start celebrating, the same study shows that their life satisfaction is heading in the opposite direction.
Published in Health Economics, the research was led by PhD candidate Ashani Abayasekara, along with PhD supervisor Associate Professor Liang Choon Wang and Associate Professor Jun Sung Kim from Sungkyunkwan University.
It finds that as house values climb, homeowners report better physical health but lower overall life satisfaction.
So why is this happening, and what are the implications for Australian policymakers?
What 19 years of data revealed
The four-year study, which began in 2021, analysed almost two decades of data to uncover long-term trends in the relationship between housing costs, health, and life satisfaction.
Researchers examined data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, covering close to 24,000 Australians from 2001 to 2019.
Using rigorous statistical methods, they isolated the true impact of rising housing costs while accounting for factors like income, employment status, and education levels.
Physical health was assessed through mobility and general wellbeing indicators and emotional health through measures of mental health and vitality.
Life satisfaction was measured across eight key areas, including financial security, personal safety, and community belonging.
Ms Abayasekara said using the pre-pandemic dataset ensured a clearer analysis of housing impacts without the temporary disruptions and distortions caused by COVID-19.
“Post-2019 trends could also be affected by the pandemic, making it more straightforward to look at impacts pre-pandemic,” she said.
The price paradox: healthier, but unhappier
The research found that as property values soar, homeowners aren’t just building wealth; they are also building better physical health.
Why? One theory is that financial security allows homeowners the flexibility to prioritise their physical wellbeing – whether that is joining a gym, eating healthier food, or even working fewer hours.
But there’s a catch.
While rising house prices create financial winners, they also fuel dissatisfaction – even among those who should, in theory, benefit the most.
“Typically, one might expect that as house prices rise, homeowners would experience increased happiness and life satisfaction under the pure wealth mechanism,” Associate Professor Kim said.
“However, this may not be the case if those homeowners have long‐term plans to move to even better areas in the future. As house prices rise, homeowners may find it increasingly difficult to afford homes in their desired areas, potentially leading to frustration and reduced life satisfaction.”
Another important finding is that despite lowering satisfaction, higher house values do not affect emotional health of either homeowners or renters.
“This suggests that the negative impacts of rising housing costs are not as extensive as to affect one’s overall emotional wellbeing as opposed to satisfaction with specific life circumstances,” Ms Abayasekara said.
Rethinking housing policy for a healthier future
Not everyone is affected equally by rising housing costs. The study found older homeowners and highly educated individuals tend to benefit the most, enjoying better health without significant declines in life satisfaction.
By contrast, younger Australians, renters, and those with lower education levels experience the highest levels of dissatisfaction. The study’s authors say these findings have serious housing policy implications.
Rising house prices shouldn’t automatically be seen as a sign of economic success – especially when they come at the cost of widespread dissatisfaction and growing inequality.
“Our findings on the impacts of rising housing costs on health and satisfaction, point to specific groups,” Associate Professor Wang said.
“In particular low-income renters and younger and lower-income homeowners that require priority attention in the provision of affordable housing, particularly at a time when the Australian economy is facing its worst housing affordability crisis.”
Read the full paper in Health Economics.
