Debt, home repossessions portent for Australia poll

By Michael Perry

SYDNEY (Reuters) - Soaring home repossessions in working class suburbs of Sydney and Melbourne, where elections are won and lost in Australia, may be a dark portent for Prime Minister John Howard as he gears up for a 2007 poll.

Howard has won four elections based largely on his ability to manage the economy, now in its 16th year of growth driven by a global commodities boom and record low domestic interest rates.

But Australia's low interest rates have turned out to be a double-edged sword, creating two separate Australian economies -- one very well-off due to a housing boom and the other struggling under a mountain of debt.

Sydney's tabloid Daily Telegraph, the city's biggest selling newspaper and voice of the working class suburbs, has warned the great Australian dream of home ownership is fast turning into the "great Australian nightmare" for many voters.

"The faltering dream of a home in the suburbs does not bode well for a federal government staking its re-election hopes on its economic credentials," said the newspaper in an editorial.

Australia's opposition Labor has opened a comfortable lead over the Howard government in opinion polls, ahead of an election expected in late 2007.

MOUNTING DEBT

Three small interest rates rises in 2006, rising credit card debt and a dip in housing prices means household debt is now growing faster than assets and many voters are hurting.