Falling home ownership creates democratic ‘doom loop’

Falling rates of home ownership are helping to drive election turnout rates down among the young, which is creating a type of 'doom loop' for democracy as older property owners vote for policies that drive house prices ever higher, and youth turnout rates ever lower. Bernard Hickey reports.

Victoria University's Democracy Week has gone into the depths of the fall in democratic participation among the young in New Zealand and how it could be reversed to keep our democracy healthy and avoid the worst excesses of countries like the United States. Over there, rising inequality and polarisation of political views has turned many off voting, which has turned into a self-fulfilling prophecy where ever smaller groups of people vote for politicians and policies that benefit themselves at the expense of the non-voting masses.

Until now, New Zealand has seen its version of democracy as much cleaner, less dependent on private donations and less vulnerable to being captured by special interests than America's. But a recent slide in turnout among the young is raising questions about whether another dominant trend of the last 20 years - falling rates of home ownership - is fueling a self fulfilling prophecy where property owners have a disproportionate and growing dominance of our democracy as they become a smaller share of the population.

New Zealand's overall voting rate in the 2014 election was 77 percent of enrolled voters and 72 percent of the voting age population, while just 55 percent of the voting age population voted in last year's presidential election in the United States. Around 62.5 percent of enrolled New Zealanders aged 18 to 28 voted in the 2014 election, but that doesn't take into account those who had also not enrolled. Those 364,613 voters in that age group represented just 52 percent of the estimated 696,240 residents in that age group in 2014.

Voting rates among those aged over 60 ranged from 86 percent to 88 percent. There were 752,437 people over the age of 60 who voted in 2014, which represented 84 percent of the population of 895,800 resident in 2014.

"There are people whose interests arguably aren't being fully taken into account, and one reason for that is politicians know that young people and people who have fewer assets don't vote."

Victoria University's Political Science Professor Jack Vowles, along with colleagues Hilde Coffe from Victoria University and Jennifer Curtin from the University of Auckland, are about to publish a book looking at inequality and the 2014 election, based on the results of the New Zealand Electoral survey. This is a survey of 1,462 people of randomly selected eligible done two to three days after the 2014 election that asks a range of questions, including what assets they own.

"Young people have always tended to vote less than old people, but the gradient has got a little steeper," Vowles said of the recent fall in youth participation.

Vowles told me the survey had shown a connection between low voting rates and falling levels of home ownership among the young. Home ownership rates fell sharply between the 2001 and 2013 censuses for those aged 20 to 40. The 2013 census found 43 percent of people aged 30–39 years owned their home, down from 54.6 percent in 2001, while home ownership for those over 70 was stable around 77 percent.

New Zealand's voter participation rate among young voters was falling, and was falling in particular for those that did not own property, he said. Vowles wrote a paper on the 2011 New Zealand electoral survey which also showed a "significant and substantial" relationship between asset ownership and voting rates.

"There are people whose interests arguably aren't being fully taken into account by Government as they should be, and one reason for that is politicians know that young people and people who have fewer assets don't vote," Vowles said.

"They know that older people are people who own houses and they do tend to vote, so they tend to think about the policies that might benefit the people who actually vote as opposed to those that don't," he said.

"The implications of a community where inequalities grow, voting divisions grow, mean that democracy's reputation is downgraded."

Vowles and fellow academics talked about the challenges of getting younger people to vote at a Democracy Week event at Victoria University event on Tuesday.

Kate McMillan, a senior lecturer in political science, pointed to Vowles research on the link between non-voting and ownership of assets.

"We have a country which is increasingly seeing things like home ownership fall out of the grasp of younger people and so one of the implications of that finding about assets is that if we do see a situation where young people are less and less likely to be able to own their own home," McMillan told an audience of students.

"They will become asset poor, and this perhaps gives another reason to think about policies that make housing affordable and available to young people, because the implications of a community where inequalities grow, voting divisions grow, mean that democracy's reputation is downgraded," she said.

McMillan pointed to policies that encourage home ownership and the potential for a capital gains tax.

Labour campaigned for a capital gains tax and a higher retirement age at the last election and lost, although just-resigned leader Andrew Little changed those policies when he became leader in late 2014 after he argued they helped cost Labour the election. New Zealand First, who are riding high in the polls and well supported by elderly voters, is implacably opposed to a capital gains tax, along with National.

Parties of both sides of politics and in both central government and local government (where youth voting rates are even lower) have pursued policies that effectively helped increase house prices in the last 20 years, including restricting land supply, turning down official recommendations for land and capital gains taxes, introducing resource management laws that restricted housing development and pursuing high migration policies that increased housing demand.

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