Happiness and buying a house in Sydney

The price of housing in Sydney is sky-high. If you’re in the market, it’s worth seeing what happiness research has to say.

Derelict two-bedroom terrace house in inner Sydney valued at more than $1 million

In 2015, the median price of a house in Sydney surged to over a million dollars. That’s about $750,000 in US dollars or 630,000 euros.

For decades, Sydney house prices have been increasing way beyond inflation. The ratio of median prices to median income is one of the highest in the world, and many young people despair of ever owning a house. Some people in occupations like teaching and nursing can only afford houses far from the city centre, often requiring long commutes.

Diagnoses of the problem abound. Commonly cited are government restrictions on land use, the absence of a capital gains tax and the policy of negative gearing that rewards investors who rent out their properties at a loss while anticipating large capital gains.

The problem is replicated in other major urban areas in Australia, where housing prices and rents have grown enormously. The exorbitant cost is largely due to the inflated price of land.

A happiness perspective

It’s useful to step back a bit and ask, why do people want to buy a house or a unit? When they own one already, why do they want a larger one? Why do they value ocean views? A key factor is the search for happiness. This means there is much to be learned from happiness research.

People know when they are happy or sad, but research shows that most people are not good judges of what makes them happy. Most people think that more money will make them happier, so they go in search of better-paying jobs. They think possessions will make them happier, so they obtain a huge mortgage to buy the biggest house possible, and buy new cars, fancy clothes, the latest iPhone and all sorts of appliances.

If you’re poor or destitute, having more money will definitely improve your wellbeing. But for those with a modest income or above, pursuing more money is not a particularly good way to improve happiness.

The reason for this is a process called adaptation. When you get used to something, it loses its appeal. Adaptation applies most of all to the environment around us. Having a large house initially is appealing but after a while it loses its novelty and just becomes the way things are, and you’re not much happier than if you lived in a small house. Similarly, a great view is appealing, but only when you pay attention to it. When it becomes routine, it no longer gives a happiness boost.

Renovated four-bedroom house in outer Sydney sold for $1.7 million in 2015

There’s a saying, “Don’t buy groceries on an empty stomach” because you’re likely to end of buying much more than you need. The same applies to housing. The biggest and most prestigious options are attractive but may not give lasting satisfaction.

For promoting happiness, other options are more reliable. Among the things that research shows reliably improve happiness are fostering relationships, engaging in physical activity, helping others, expressing gratitude, practising mindfulness and avoiding social comparison. These are worth considering in relation to housing issues.

(For accessible treatments of happiness research, see for example Sonja Lyubomirsky, The How of Happiness and The Myths of Happiness; Martin Seligman, Authentic Happiness; Paul Dolan, Happiness by Design; Tal Ben-Shahar, Happier. For popular critiques of the research, see Barbara Ehrenreich, Bright-sided; Ruth Whippman, America the Anxious.)

Relationships and housing

For most people, personal relationships with family, friends, co-workers and others are the most important factor in happiness. So when choosing where to live, it’s worth asking, “How will this affect my relationships with the people I care about the most?”

Sarah is considering whether to take an exciting new job. It will require a longer commute and longer hours, but it pays more. Should she take it? If she has a close circle of friends and the new job will leave less time to be with them, this may reduce her happiness. If she’s taking the job so she can afford a bigger house, the same applies.

Positive relationships with neighbours can contribute to happiness. Most buyers carefully inspect the house but do not exercise the same diligence in finding out about the neighbours.

The design of space can make a big difference to the way people interact. In some buildings, there are natural gathering places. In an office building this might be around a photocopier, where people bump into each other and have a chat. Likewise, the design of a house can make a big difference to personal interactions. Occupants might congregate in the lounge room or kitchen or — especially with a proliferation of screens — stick to themselves in their own rooms. A house design desirably allows privacy while providing ample opportunities for interpersonal contact.

Surveys show that commuting is one of the least pleasurable activities in people’s lives, especially when travel times are extended. Driving through heavy traffic is more stressful than walking through leafy laneways. So in choosing a house, an important factor should be the implications for travel to work, to shops, to friends and family. If there’s a convenient cycle network, this makes commuting a form of exercise, with the associated benefits of physical activity.

There’s one other factor worth taking into account: social comparison. People compare what they have with what others have, and usually feel better if they have more. This is the driving force behind conspicuous consumption, which means showing off through your fashionable clothes, new car and big house, and generally “keeping up with the Joneses”. Ideally, it’s better to avoid social comparison and focus on the positives in your own life. But if comparisons really bother you, consider living in a less expensive area so you’re not comparing your circumstances to those who seem better off.

In summary, people tend to focus on aspects of housing — the size and cost — that are less important to their happiness than being close to friends and family, enabling exercise and minimising social comparisons.

Happiness-driven policy

Housing policy in Sydney seems primarily driven by money and status. The policies on capital gains and negative gearing serve those who are most well off at the expense of others. Developers seek to maximise their profits, so new housing caters more for the rich than the poor.

Another way to approach policy is for governments to seek to maximise people’s happiness. Danny Dorling has done this in his book A Better Politics: How Governments Can Make Us Happier, available free as a pdf. Dorling focuses on Britain but most of his suggestions apply to Australia.

Dorling reports on his research about the major events in people’s lives that have the greatest effect on their happiness, either positive or negative. The biggest negative is the break-up of a significant relationship, including through death. The biggest positive is formation of a significant relationship.

If loss of relationships is the biggest negative then, Dorling argues, policy should be designed to support relationships. This has several implications for housing. One is that people should have secure housing, so they have the opportunity to build and maintain relationships. Being evicted from one’s abode is a big negative. So is being homeless. Governments should ensure that there is ample low-cost housing, and ensure that residence is secure, so that everyone can be confident of having a place to live and therefore can build relationships.

After starting a new relationship and getting a new job, the third most significant single event associated with higher than usual happiness in any given year is securing a permanent home.” (p. 53)

Dorling has written extensively on economic inequality, and this is a prominent theme in A Better Politics. There is actually enough housing for everyone, but it is unequally distributed: wealthy people have two or more homes but live in only one at a time, so there is a lot of unoccupied housing. Dorling favours progressive taxation plus a tax on wealth, and introduction of a basic income.

Danny Dorling

Dorling points to other countries in Europe where governments collect more taxes and provide more collective welfare. Britain lags behind on many criteria, including equality.

“We cannot be happy if we do not feel safe and secure in our homes. The government has a responsibility towards the quality and quantity of housing available and it must introduce the security and quality in socially and privately rented housing that we [British people] currently lack compared with nearby countries.” (p. 57)

Using happiness as a criterion for policy is well and good, but this is far off the agenda in most parts of the world. Governments still aim to increase economic growth, which in practice primarily benefits the wealthy. Mass media, advertising and governments perpetuate the belief that more money is the most important way to make people happier. Meanwhile, the implications of happiness research are neglected so far as policy is concerned. Instead, seeking happiness is seen as something for each individual to pursue on their own, within the social system as it exists.


If housing is something you really care about, there is another option: become a campaigner for affordable housing. Research shows that when you help other people, it makes you happier. This is why some lawyers are willing to take a huge salary cut in order to practise public interest law: the satisfaction of serving those who need help the most outweighs the financial benefits of working for a big corporation. Similarly, jobs such as teaching and nursing provide satisfactions that can compensate for low wages and stressful working conditions.

Even better, join an action group pushing for homes for poor people. You will be helping others and gain the benefits of working with others on a common cause. Activism can be its own reward.

Brian Martin

Pearls before swine, by Stephan Pastis, 6 May 2018