A housing price collapse may see a coalition of renters and mortgage holders emerge that would doom the Conservative electoral base
The Conservative party has good reason to think that its vote is only as safe as house prices. Its 2019 victory could be ascribed to two homeowning demographics – outright owners and mortgage holders – which saw millions more back the Tories ahead of Labour. Not only did the party return to levels of support in these two groups in England and Wales not seen since 1992, but it extended its lead among homeowners over Labour in every region apart from London and the north-west. Only with renters was Labour comfortably ahead.
Despite the Conservatives’ poor economic record, house prices explain why large parts of the population felt as if they were getting richer – and voted Tory. While real wages sank and productivity flatlined, property owners saw their house prices going up while their repayments were low. This feelgood factor looks like disappearing as soaring borrowing costs make payments unaffordable. The Financial Conduct Authority warned this week that more than 750,000 households are at risk of defaulting on their home loans. With interest rates going up, mortgages will become more expensive and buyers will be able to borrow less – and property prices should fall. Some think that house prices could drop so fast that, in real terms, they end up where they were a decade ago. Were that to happen, the Conservative dream of a property-owning democracy would become a Tory nightmare.
