Adam Smith Institute

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If only Open Democracy could actually grasp numbers

It really shouldn’t be this hard for people to grasp basic concepts. Open Democracy tells us that there are horrors, that we must have rent controls - that best way to destroy an urban environment short of aerial bombing - and eviction bans and PANIC!:

Statistics on private rents published on Wednesday by the Office for National Statistics show rents are rising at their fastest rate since records began, with tenants facing a 3.6% increase.

They’ve managed to quote correctly at least:

Private rental prices paid by tenants in the UK rose by 3.6% in the 12 months to September 2022, up from 3.4% in the 12 months to August 2022.

Except:

Growth in average total pay (including bonuses) was 5.1%, and growth in regular pay (excluding bonuses) was 4.7% among employees in April to June 2022.

Rents as a portion of income are actually down a couple of percent. Further:

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 8.8% in the 12 months to September 2022, up from 8.6% in August and returning to July’s recent high.

Real rents, rents adjusted for the general inflation rate, are down around 5%.

Rents falling as a percentage of income, rents falling in real terms, these are not the sorts of things which should spark a panic and the imposition of rent controls now, are they? Except, of course, if you’re from the end of the intellectual spectrum that finds basic concepts too difficult to grasp. Or, perhaps, assuming that the reading audience is and deliberately hoping to confuse.

We can even go further with these numbers. Nominal wages have risen by less than the inflation rate, therefore real wages have fallen. Nominal rents have risen by less than both inflation and the rise in nominal wages. Therefore real rents have fallen more than wages have. Renters are thus better off.

Numbers really aren’t this hard to grasp. No, we assure the arts graduates, they’re that not difficult.