I’ve blogged a fair few times about how the ONS’s official figures have been showing rents falling in real terms and the gap between that evidence and the standard political rhetoric about soaring rents.
Which made the news that the ONS has revised its figures upwards, um…, interesting. So how does my regularly repeated argument fare in the face of the new evidence?
Rather better than I feared at first.
First off, let’s look at the last year. According to the new figures, rents have risen by 1.7%. That’s for the 12 months to December, during which time inflation (CPI) was 0.5% (though if we were doing the year to November it would have been 1%). We don’t quite have regular pay figures for the same period but for the year to November it was up by the very same number: 1.7%.
In other words: compared to pay, rents have static. Compared to inflation, rents are up in real terms by just over 1% in a year. Neither figure comes close to the “soaring rents” rhetoric that’s even more of a cliche than helping hard-working families.
Second, let’s look at the longer trend using a graph put together by Shelter:
Compared with inflation, rents have again not been soaring away, although there is a very recent gap that might presage a change in the trend. Again the picture over several years (including an extended period where rents were falling in real terms) is one that’s completely different from the “look at those rents soar” rhetoric.
Compared to earning, the picture’s less sanguine. But the issue here isn’t about housing, it’s about low growth in earnings. That’s a crucial distinction to make – because diagnose the problem wrongly and you fix the wrong thing. What needs fixing is moving to a higher wage growth economy. It’s not a housing issue; it’s a different one.
It’s for those reasons that Shelter’s own interpretation of the new figures misses the point. Bold is deployed to highlight how:
The update shows that over the last ten years private rents have been going up twice as quickly as they previously thought.
But even with the doubling, the new figures don’t back up the rhetoric of soaring rents. The gap between rhetoric and reality has been so big that even after the statistical changes, the rhetoric is still way off.
Shelter also falls foul of the classic evidence, discard, distort trope. As I explained it before:
Report starts with average figure. Then says some areas are much worse than the average. Then goes on to only talk about those place which the story has just told you aren’t typical but are the outliers.
Take the evidence, discard it by picking out the outliers in one direction only, and then distort the story by only talking about those extremes on one side of the average: evidence, discard, distort is a remorseless threesome that plagues all sorts of media reporting which is apparently fact-based but actually abandons the evidence almost as soon as it is presented.
Shelter makes exactly the same mistake:
So that means that on average, over that period [five and three quarter years] rents increased 8.3% for all renters. And for some people – particularly those in London or for new entrants and people moving home – costs will have increased even more.
Average figures: that’s the starting evidence. Some people have done better than average, some worse. But discard those who have done better and distort by only talking about the outliers on one side. (And remember, the more you talk up outliers on one side of the average, the more there must be counterbalancing outliers in volume or distance on the other side of the average too.)
A final note: 8.3% over five and three quarter years. If, say, pensions had gone up by the same amount would people talk about soaring pensions? If Iain Duncan-Smith was to make a speech saying that spending on a benefit was leaping up massively when the figures were 8.3% over five and three quarter years, would you agree with him?
So the verdict? My original point still stands. Rents aren’t doing what those talking about renting keep on saying.
Footnote: it’s worth taking a look at my previous footnotes which cover some of the most common reactions to my basic argument, though note the newer numbers above.