Housing costs come from three main sources.
- The cost of the house itself comes from the median house prices published by ONS. The dataset is called HPSSA Dataset 9, and is available online. House prices in 1995 were increased in line with inflation, as measured by CPIH (a 64% increase between 1995 and 2020). The model simply takes the difference between the price in 1995 (adjusted for inflation) and 2020. This inflation-adjusted difference is used as the basis for all subsequent calculations. In some cases, data is not available for those years, in which case I use the nearest year. The only exception is the City of London, which doesn’t seem to have data available at all for detached and semi-detached properties, so I removed it from the website. It only includes data for England and Wales – apologies to our Scottish or Northern Irish readers. I’ll look into including them in future iterations.
- The number of years taken to save for a deposit assumes a 15% deposit (of the additional inflation-adjusted cost between 1995 and 2020, not the full cost of the house in 2020). The savings rate (if not entered manually) is assumed to be 8.2% of the relevant disposable income for that local authority.
- Finally, the cost of rent is calculated from data provided by the Urban Big Data Centre. We took median data for 2016, which was the latest available. This is simply multiplied by the number of years above to find a final rent cost.
Two points to note when interpreting the data are:
- All data refers to the period 1995 – 2020 (apart from rent, as discussed above). This captures the meteoric house price increase of recent decades, but misses out the considerable above-inflation increases between approximately 1970 and 1995. Data before 1995 is harder to come by, and not broken down by local authority, but an interesting exercise would be to extend this dashboard further back in time. If you are interested in helping with this, please contact me.
- The rent data provides the cost of an average property – which is not necessarily the rent that the average person pays. An earner on an average income is likely to house-share with a partner, friends or strangers, or live with parents. Especially in high-rent areas (such as London), this means that the data on the cost of renting is likely to overstate the actual cost of renting for many people. We didn’t adjust it downwards for two reasons. Firstly, the renter is paying a cost (though not a monetary one) by living in house-shares or with family rather than in a house of their own. Secondly, this in itself is a reflection of our failure to control house prices and rents within the areas where many people want to live. We believe that the average earner should be able to afford to rent an average property in their neighbourhood.
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