Do rising house prices threaten the Morrison Government?

News.com’s Tarric Brooker believes that soaring property prices and the locking-out of first home buyers could dent the reelection chances of the Morrison Government:

In the 1970s then British Prime Minister Margaret Thatcher came to the conclusion that one of the key factors in providing citizens with a stake in society was home ownership…

Many renters don’t vote for conservatives

With 50 per cent of homeowners directing their first preference votes to the Liberals or Nationals according to ANU’s 2019 Election Study, it’s clear that the trend of homeowners voting for conservative party’s holds true in Australia…

Only 27 per cent of renters direct their first preference vote to the Coalition, with Labor receiving 41 per cent and the Greens 20 per cent…

First home buyers are currently being priced out in droves as deposit requirements rise several times faster than the median household can save…

Given the rapid rate that first home buyers are being priced out of the market, rocketing housing price growth may start to place pressure on the Coalition’s vote sooner rather than later in the grand scheme of things.

But even if rocketing housing prices were to come back to Earth, the home ownership rate trend is not the Coalition’s or Aussie first homebuyer’s friend.

I agree that over the next several decades Australia’s home ownership rate will probably decline, and this may favour left-leaning parties.

However, I do not believe that the current red hot housing market poses a risk to the Coalition at the upcoming election.

This year’s Census is likely to show the first rise in the nation’s home ownership rate in decades thanks to the strong lift in first home buyers (FHBs):

First home buyers

Big rise in first home buyers.

We also know that the Morrison Government will likely throw a bunch of pre-election bribes at FHBs to entice their vote.

It is also worth remembering that Labor lost the last election in part due to its plan to unwind negative gearing and reduce the capital gains tax discount. Like it or not, Australians favour politicians that support higher property prices.

If the Morrison Government loses the next election, it won’t be because of housing. It will be because it has botched a range of other issues, such as the vaccine rollout, and has refused to take responsibility for anything.

Unconventional Economist

Comments

    • The people who are locked out are gaslit into thinking that it is all their own fault. It’s similar to the wellness industry. The fault is always with the individual and never due to people being in a precarious position due to the political economic system they are in. Just try harder, take out a bigger loan, wake up at 5am and meditate, take these drugs, get these renovations done to the house, work 14 hours a day, spend 6 hours a day with your kids, finish one piece of Russian literature a week, learn to code, do cross-fit, get an investment property, otherwise you are a failure and we’ll make sure that you are punished for it.

  1. I remember articles on the perils of wasted “investment ” in bidding up existing houses instead of productive assets during first leg of bubble decades ago. The logic was sound but clearly the country is purely a lifestyle economy.

  2. TL;DR: No, but falling prices surely will.

    Long version:

    Labor’s abolishment of negative gearing and changes to capital gains tax discounts were the last best chance of causing downward pressure significant enough to make housing affordable again within Sydney and Melbourne. With Labor’s defeat, no party will be willing to touch these sacred cows again for a decade or more.

    Any housing policy Labor announces for the next election will be demand-side fiddling at the edges (more tiny programmes programmes for FHB, etc.).

  3. Who doesn’t like Tarric? I think he’s just great. This government needs sacking for the war it has relentlessly waged against those who work and those who are young in favour of the asset holders and the non taxpaying spivs. If you have difficulty voting for a woke ineffectual local despising opposition, rest assured that you can adopt Pat Condell’s method of always finding someone you can vote against.

  4. Tarric Brooker

    As I said in the articles conclusion, I don’t expect home ownership to be a major factor in the current election cycle.

    “In time, if the polls regarding the voting intentions of non-homeowners hold true the Coalition may face a far more challenging electoral landscape.

    For now it seems the pandemic, vaccine rollout and other issues will define the upcoming election, but in the long term home ownership may emerge as a key political issue that will need to be better addressed.”

    Its likely to be a slow burning issue that plays out over decades slowly eroding the base of conservative party’s as support for the status quo wanes.

    However, that may be accelerated if we see the rise of a third party which targets the home ownership issue in order to win senate seats.

    • Its not just young people Tarric, old people like me have kids, in my case in their 30s, and they are appalled seeing hope in the future get snuffed out by big Australia BS. The export of intellectual industries, the debasement of the currency, the pimping of the RBA, the engorgement of the big end of town, the distortion of the tax laws and the Balkanisation of the culture do not deserve to be rewarded.

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