How Do Voters React to Rising House Prices? Evidence from Germany and the UK

• In Event: The Political Economy of Wealth Inequality

Abstract

Rising house prices are a major driver of wealth inequality. But how do voters react to increasing house prices? When examining the link between house prices and political outcomes, recent scholarship suggests that voters—both homeowners and renters—generally welcome rising house prices as a sign of economic health. In turn, such positive socio-tropic evaluations are presumed to influence voting behavior. However, we argue that voters' socio-tropic perceptions of rising house prices vary significantly across countries. Through an innovative survey experiment with 1,352 respondents in Germany and the UK, we show that German homeowners regard rising house prices as a negative economic development for their country, while British homeowners view them positively. Strikingly, this cross-national variation cannot be attributed to differences in voters' attitudes towards financialization; instead, both countries’ different economic institutions likely shape voters' different reactions to rising house prices. These findings improve our understanding of the political consequences of rising house prices and wealth inequality in advanced economies.

Authors

• Alexander Reisenbichler, University of Toronto

• Pascal König, TU Kaiserslautern