Do Pocketbooks Drive Politics When Mortgage Belts Tighten? Comparing the Politics of Property Booms in Australia and Denmark.

Do Pocketbooks Drive Politics When Mortgage Belts Tighten? Comparing the Politics of Property Booms in Australia and DenmarkJens Ladefoged MortensenUniversity of Copenhagenjlm@ifs.ku.dkLeonard Seabrooke Copenhagen Business Schoolls.cbp@cbs.dkAbstract If the fields of comparative and international political economy are interested in examining the sources of power and wealth in the world economy, then why exclude the key everyday asset for social stability and/or wealth creation - residential property? To investigate how residential property markets matter for change in the world economy, this paper provides a comparison of changes to taxation and housing finance regimes in a Liberal Market Economy (LME), Australia, and a Coordinated Market Economy (CME), Denmark. During the last decade, like most member states of the OECD, Australia and Denmark have both experienced residential property booms that have been facilitated by government regulatory changes to taxation and housing finance systems. These reforms, particularly those following financial deregulation, have introduced new mortgage instruments and changed economic incentives for selecting residential property as an investment vehicle. The reforms may also be associated with a more general process of 'neoliberalisation' that is transforming taxation and housing finance regimes to favour a conception of housing as a means to wealth rather than as a social right. During the creation of their respective property booms, both Australia and Denmark have made a turn to the right in politics. We suggest that this aided the framing of residential property as increasing a means to wealth rather than as a social right. Predictably, this has been more pronounced in Australia, where a 'wage-earners' welfare regime' has encouraged the (risky) use of property as a means to improve one's economic standing, while Denmark's high welfare regime has encouraged more risk-averse attitudes towards residential property, as well as viewing the state as more responsible for providing universal access to a home. In Australia and Denmark household indebtedness has climbed back to levels experience prior to the mid-1980s housing price collapses. While the property booms have eased recently, ongoing sensitivity to regulatory or economic changes are having an ongoing political impact.This paper first explores a framework for understanding the place of residential property markets within comparative and international political economy. It assesses the relevance of 'varieties of capitalism', 'three worlds of welfare capitalism' and, more broadly, institutional complementarities approaches to mapping differences in residential property markets within the OECD. It also considers the relevance of constructivist approaches to institutional change. Following this, and after outlining basic differences between Australia and Denmark, the paper traces the evolution of taxation and housing finance in the Danish and then Australian cases. Particularly important here is how changes in regulations for residential property were framed within political debates. The paper concludes with bv reflecting on the 'neo-liberalisation' or 'commodification' of residential property markets in Australia and Denmark, as well as speculating on its future development. We answer in the affirmative to the question: do pocketbooks drive politics when mortgage belts tighten? But the construction of how the economy should work is critical in how homeowners and would-be homeowners are politically motivated to call for change. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]