Much of the literature on recovery focuses on the economy, the physical environment and infrastructure at a macro level, which may ignore the personal experiences of affected individuals during recovery. This paper combines internal factors at a micro level and external factors at a macro level to model for understanding perception of recovery (PoR). This study focuses on areas devastated by the 2008 Wenchuan earthquake in China. With respect to three recovery-related aspects (house recovery condition (HRC), family recovery power (FRP) and reconstruction investment (RI)), structural equation modeling (SEM) was applied. It was found that the three aspects (FRP, HRC and RI) effectively explain how earthquake affected households perceive recovery. Internal factors associated with FRP contributed the most to favourable PoR, followed by external factors associated with HRC. Findings identified that for PoR the importance of active recovery within households outweighed an advantageous house recovery condition. At the same time, households trapped in unfavourable external conditions would invest more in housing recovery, which result in wealth accumulation and improved quality of life leading to a high level of PoR. In addition, schooling in households showed a negative effect on improving PoR. This research contributes to current debates around post-disaster permanent housing policy. It is implied that a one-size-fits-all policy in disaster recovery may not be effective and more specific assistance should be provided to those people in need.