How statistics get twisted

This week\’s Shelter report found average private rents were now beyond the reach of ordinary working families in 55% of English authorities, costing well over a third of their income,

No Polly, that\’s not what the report said.

It said that private rents were above a third of median income in 55% of local council areas.

Which isn\’t the same thing at all. For the calculation of median income does not include any aid or help that might be coming from government: like, you know, housing benefit?

Yes, this is an important difference.

Generally, when we discuss \”household income\” we discuss it after tax and benefits. The Shelter report does not, it looks at wage income only.

This is market failure on a phenomenal scale, just as it was in the boom. The market doesn\’t ensure supply meets demand, in good or bad times. This ideological government concludes the cause must be restrictive planning laws, the state always to blame for any imperfection in markets. But developers are already sitting on prime land with planning permission for at least 300,000 homes, waiting for prices to rise, nothing to do with planning.

House building in England is around 100,000 a year at present (roughly you understand). It can take two to three years to get planning permission on a site. The builders are therefore sitting on normal trading stock of land. They\’re not hoarding it, they\’re simply holding a reasonable amount given the time it takes to replace the land in the land banks.

The government needs to give financial guarantees, so pension funds can invest in housing bonds to build a stronger private rental market.

What? We\’re to have Fannie Mae and Freddie Mac are we? That did work so well, didn\’t it?

4 thoughts on “How statistics get twisted”

  1. Well, we’ve already got Adam Posen suggesting a UK version of FM & FD for SME lending, haven’t we? Why not Polly Toynbee suggesting the same thing for housing? With a bit of luck Osborne won’t listen to either of them. But…oops, it looks like he finds Posen’s idea attractive, doesn’t he?

  2. So most people can house themselves for one third of their incomes. Sounds like riches to me. Of course, to those born with a silver spoon in their mouths it probably sounds a lot.

  3. If rents are above 1/3 of median income in 55% of boroughs, in 45% of boroughs they are below 1/3 of median income.
    So an alternative title to the report suggests itself:
    “Rents close to long term historical average.”

  4. The fact that a builder has planning permission on a plot does not necessarily mean that he can build on it. Near here, a builder applied for and obtained permission for 20 to 30 houses on 3 adjoining plots, but he does not yet own two of the plots. Indeed, when he first applied I think he owned none of them.

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