Cause for Celebration or Concern? Voter Reactions to Rising House Prices

Abstract

Little is known about voters’ demands in response to rising house prices. We argue that voters’ house-price perceptions and housing policy preferences depend on countries’ differing economic institutions. In the UK’s liberal welfare and credit regimes, we expect voters to view house-price growth as a comparatively positive sign for the economy and show little demand for policies restraining prices. In Germany’s generous welfare and restrictive credit regimes, we expect voters to view house-price appreciation with more skepticism and demand policies restraining prices. First, through a custom survey, we experimentally demonstrate that British homeowners regard house-price growth as a sign of economic health, while German homeowners and renters from both countries do not. Second, we find that German voters, both homeowners and renters, support policies restraining house prices more so than their British equivalents. Our findings suggest that similar types of voters have different housing attitudes in differing institutional contexts.