Why house prices could decide Australia’s next federal election

As the PM faces criticism over the vaccine rollout and Australia’s covid situation, it could be an unlikely factor that could decide his future.

Despite what feels like an almost permanent election campaign in modern federal politics, since July 1 the Prime Minister can call an election any time he chooses between now and April next year.

With polling since the start of the year either tied or slightly favouring Labor, it’s set to be a close and very complex election campaign.

But as the Coalition readies itself for its attempt to win government for the fourth consecutive time, there are some trends within our society that would be giving the Liberals and Nationals pause about their long term future.

At the heart of conservative ideology there is one key element that defines that school of thought, past, present and future.

The desire to conserve and protect something positive about our society in the present, so it is preserved for the benefit of future generations down the road. For some conservatives it’s about ensuring the protection of values, community or a way of life.

This leads us to why this key element of conservative ideology is so important, to not only the future of the Australian Liberal Party and the Nationals, but conservative parties throughout much of the Western world.

House prices and the next election

But what if a voter feels like there isn’t much of the current status quo that is actually worth preserving for the future? This is an issue that the Coalition will increasingly be staring down in years to come if budget forecasts are realised.

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Wages are predicted to stagnate over the next five years.

According to forecasts from May’s federal budget, in inflation adjusted terms, wages will go nowhere between July 2021 and June 2025.

At the same time house prices, some experts are expecting housing prices to rise nationally by 25 per cent by 2023 if inflation and interest rates remain low.

When you put it all together it’s hardly the perfect atmosphere to encourage voters to embrace conservatism, when many feel like there is little about the current political status quo that benefits them.

This trend is illustrated strongly in the Australian National University’s election study, which concluded that a record high 75 per cent of respondents believe that people in government look after themselves.

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Trust in government is plummeting.

But where the rubber really meets the road in terms of voting intentions and conservatism is the issue of home ownership.

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.

Thatcher began a campaign of selling off social housing to its current tenants, often at below market value. This drove a large expansion in the number of Britons who own their own home, a trend that is still benefiting the British Conservative party at the ballot box to this day.

In the words of a 2008 Parliamentary Committee report on Housing Affordability: “Home ownership offers many distinct advantages for individuals and the wider community by enhancing our sense of place, our sense of self and our connections with the broader community.

“It (home ownership) can provide social stability, economic reliability and community assurance and can impact dramatically on an individual’s aspirations for independence and security.”

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.

Among voters who own an investment property, the preference for voting for conservative parties is even more pronounced. With 59 per cent of investment property owners directing their first preference vote to the Coalition.

On the other hand, the fortunes of the Coalition vote among renters are a completely different story. 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.

Renters are a lot less likely to vote for Liberals than homeowners. Note: Estimates are percentages.

As speculation over Australia potentially becoming a nation of renters continues to build, these stark figures are a clear warning sign for the Coalition that falling home ownership rates could be politically damaging in the long term.

With housing prices currently rocketing by as much as $1266 per day in places like Sydney and national price growth recently recording its fastest rate since the late 1980s, it’s not just the Coalition of decades in the future that may need to be concerned.

First home buyers are currently being priced out in droves as deposit requirements rise several times faster than the median household can save, despite a record high 60 per cent of first home buyers being assisted with an average of more than $90,000 from the bank of Mum and Dad.

Young people are relying heavily on their parents to be able to buy.

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.

According the NSW Intergenerational Report released in June, the share of households owning a home will continue to fall, dropping to 58 per cent of households by 2060 from around 66 per cent today.

As home ownership continues to rapidly rise out of the reach of millions of Aussie households and forecasts predict a future of practically zero real wage growth, the current conditions are hardly endearing the status quo to Australians who don’t own their own home.

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.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator