Could housing and federal Labor's recovery be linked?

This is entirely speculative, but our research on confidence in residential real estate led me to look at auction clearance rates, and it struck me that there could be a relationship between them and the recovery in federal Labor's vote.

The graph below combines Newspoll's Labor two-party preferred figure with data about auctions and clearance rates sourced from RPData.

ALP Federal 2PP versus auction clearance thumb

 Source auction data RPData

The dots are the Newspoll results using the scale on the left, the line also uses the scale on the left and is auction clearance rates while the bars are the number of auctions and use the scale on the right.

While the GFC hit in 2008 the housing market seems to have carried on strongly with clearance rates peaking at around 80% in mid-2009. This could have been helped by a sharp reduction in the number of auctions which would have made property less available to a market that seems to have still been confident.

The confidence appears to have flushed out more vendors and all through 2010 you can see clearances declining whilst numbers of auctions actually increased to the end of 2010.

Kevin Rudd was deposed as prime minister on June 23, 2010 at about the time that Labor support, after starting the period close to 60 per cent is hovering around 50 per cent. This is after a period when auction clearances have been declining, but before what looks like the panicked listing of properties in late 2010.

Given the average Australians huge investment in the real estate market through their home, and also the exposure to financial risk that the leverage involved in buying that home entails, it's reasonable to interpret the auction clearance graph as measuring public confidence in the economy. And it's not unreasonable to see the decline in confidence being at least one driver behind the decline in Labor's vote.

It also helps to explain why Victoria has been Labor's strongest state, because it was the one place in Australia where the real estate market continued unabated.

If this conjecture is correct, it also helps to explain why Labor has been increasing in popularity over the last few months - things are starting to improve in the market.

Of course the introduction of the carbon tax; prosecution of policies such as the NDIS, the Gonski Report and now the Asian Century White Paper; reasonable overseas performances by Julia Gillard; the gender wars; and some missteps by Tony Abbott would also have played a part.

But in analysing politics it is all too easy to invest too much importance in the strategies, tactics and practice, and not enough in the circumstances. As Bill Clintin memorably said, "It's the economy stupid", a phrase which has come back to haunt his heir, Barack Obama who is struggling because of the economy.

Gillard's fall, and now her potential redemption, may have less to do with what she and Abbott have done, and more to do with how people feel. I'll keep an eye on auction clearances and see if there is any more to be dug from their entrails as time passes.

Share this article on your favourite social bookmarking sites:
Digg! Reddit! Del.icio.us! Google! Facebook! StumbleUpon! Twitter!
 

Comments   

 
+1 #11 KimKim 2012-11-07 20:53
Actually I think no one actually wins. Long term the very people who have the most to gain Lose. All those who invest,regulate ,lend and supply housing services In the long run fail to win. Why i think it is because the cycle of boom and bust in the Australian housing sector never get really addressed. Without a real government initiative including sustainable policies to addrewss housing people affordably and appropriately. we all are loses. It is just the period viewed, That each of us use to determine their win or loss. It will take someone with courage and conviction to move forward on this in the federal arena. So In the current two party scheme That is not likely to happen. They both not interested enough in Australian or Australia to make it happen
 
 
+1 #12 RE: Could housing and federal Labor's recovery be linked?Ross 2012-11-10 10:15
The banks are creating a bigger housing bubble.They are willing to loan $900,000 to a couple on $160,000 pa with mortgage insurance of course.

Most of our new money for growth + inflation, gets expressed as debt.So if we don't have people going into debt,there can be no growth thus unemployment rises.So our Govt must then borrow from private banks to pay the unemployed.

Our net foreign debt is now 60% of GDP and predicted to reach 85% of GDP in a few years.Inflating house prices and increasing debt is not the solution.
 
 
0 #13 RE: Could housing and federal Labor's recovery be linked?Kim 2012-11-10 20:35
So If i understand what Ross says: we have an inflated Housing market Because of not having invested in a sustainable affordable housing sector.
We must be crazy!The current processes just shifts debt arround. If we want growth, then we need real policies that address these issue. Please Julia stop triping over and Make a stand so our families have a funture . Before we do not own anythink of Australia.
 
 
-1 #14 RE: Could housing and federal Labor's recovery be linked?Andre 2012-11-11 07:56
Good points.
So what we have is a flawed growth model, a situation that is out of control, where no one wins.... Yet no one can change it because of vested interest & distorting lobby groups, & it's political suicide to even talk about the real issues we have talked about....
Well I will just keep my little vote going to the greens who are prepared to have a voice on some of the tough issues.
Ahh politics today is so far removed from democracy & is so far up the debt cycles arse it's frightening.
While we have money being at the helm of the ship we are going to that ice berg... Society built on social well being & ethics is what I desire. : ) Yes I do understand most people can't imagine a life not dominated by money. I will keep dreaming though!
 
 
0 #15 RE: Could housing and federal Labor's recovery be linked?Ross 2012-11-11 11:04
Kim and Andre there is a solution.http:/ /michael-hudson .com/ Prof Hudson visited our RBA in 2009 and asked the really big question.Why don't they create some of our new money and loan it to our banks thus reducing our debt?

Presently our banks borrow 30-40% of mortgage money from OS banks who just create it from nothing anyway.

If the RBA create half the increases in our money supply of 6% which includes inflation of 3% + growth 3%, it will mean $30 billion pa plus interest can be taken off our debt.

The reason why we are in so much debt is that increases in growth + inflation get expressed as debt by private banks.That is why this system is so powerful and no pollie or mainstream economist whose livelyhood depends upon it will address this fundamentally flawed system.

The US Federal Reserve is privately owned and they have few choices.If we can get our Reserve Bank of Australia to do its job and create credit,this country will prosper.