An Asymmetric Partisanship Effect: House Price Fluctuations and Party Positions

Conventional arguments about how parties formulate their positions are usually valid for all parties across the entire political spectrum. In this paper, I introduce a new argument which portrays house price changes as an economic signal that only market liberal parties respond to in their programmatic positioning. This asymmetric partisanship effect is driven by the electoral importance that home owners have for market liberal parties as a voter group. When house prices increase, the home owning core voters of those parties are benefitting and their economic prospects turn brighter. For market liberal parties, I argue, this allows them to reach out to the undecided voters by targeting the center of the political spectrum. When house prices fall, however, and homeowners’ economic outlooks worsen, e. g. even falling into negative equity, market liberal parties have a strong incentive to send out signals of reassurance and, consequently, target their core voters. For a sample of OECD countries over the period from 1970 to 2014, my findings support this argument. During house price booms, market liberal parties move programmatically to the left while the opposite occurs when house prices are falling. In times of increasing wealth inequality and asset market volatility, understanding how those dynamics are translated into the political process is crucial for understanding future political movements along this cleavage.