ONS household count estimates are either wrong or useless. They may be both.
I'm very often wrong. If you can show me with, with data, great. If you can't, it's a waste of time screaming at me or calling me thick.
The ONS’s household count estimates deviate both from past census-verified trends in household growth and from projected household counts produced by the DCLG. This is an extremely important result. It should not be ignored. If it is correct it will almost certainly change our understanding of the UK’s housing markets. It must be verified today and if possible its methodology backdated to fit with previous data.
I am concerned that the ONS’s household estimates are not consistent with vacant homes data collected by local authorities. Given the confidence of local authorities in their empty homes datasets and the fact that these figures have been accurate in the past this suggests that the ONS’s new estimates are incorrect.
I am concerned that the ONS’s household estimates do not exist at anything less than the UK level. This makes investigating the sources of deviation from previous trends almost impossible.
I am further concerned that the deviation in the ONS’s household estimates started only after the 2011 census and after a change in the definition of a household.
In this blog post I’ll present my data. I welcome all constructive opinions. I could well be wrong.
Local authorities measure the number of empty homes and trust their data.
Local authorities measure how many homes are empty. Exactly what methods they use depends on the local authority, but it’s usually related to council tax collection. People I’ve spoken to in local authorities are confident that their empty homes data is correct and that the downward trend has not reversed in recent years.
Prior to 2013 there was an incentive for home owners to register their home as empty so that they received a council tax discount. Councils got good at checking, to avoid lost revenue.
Since 2013 there has been an incentive for home owners not to register their home as empty because they can be charged a higher rate of council tax. But saying a home is occupied when it is empty is illegal, and there is a strong incentive for councils to check because it increases their income. Councils have stayed good at checking, to avoid lost revenue.
Homes, households, surplus homes, and vacant homes
I assume that the DCLG data on dwelling supply is correct. I define surplus dwellings as the number of dwellings minus the number of households. It is knowing the number of households that’s hard.
Both the DCLG and the ONS estimate the number of households. The DCLG do so at local authority level in England & Wales. The ONS give a single number for the whole of the UK. The best overlapping set is to consider only homes in England. In 2001 and 2011, because censuses took place, both measure are the same (within error). Since 2012 the estimates have diverged.
To try and guess which is right I’ve assumed that a surplus dwelling will usually be counted as vacant by a local authority. This relationship holds well whether we use ONS or DCLG households up until 2012.
But then, when the ONS time series starts to diverge from the DCLG time series, the relationship breaks. Surplus homes using the DCLG method and vacant homes follow the same trend, but when we use the ONS method the lines go in opposite directions.
Some people who defend the ONS data argue that this is because of the changes to council tax incentives in 2013 that I’ve mentioned. The number of empty homes actually increases enormously in 2013, but people lie to avoid paying council tax and so the figures show a continued decline. I find this very unlikely, especially since the fall in vacant homes continues more or less on its previous trend.
Other people argue that the increase in surplus dwellings is caused by people who can no longer afford to live apart (young professionals or couples who would otherwise separate) decide to live together. But I’m not convinced by this either. What was so special about 2013? Why didn’t this happen in 2009, 2010, or 2011? I’m not convinced. If the ONS produced local authority level estimates of household count I could at least check this explanation. Since housing cost pressure is much higher in London than Leeds or Bradford I could see how the divergence compared in those places. But since the ONS produce a single figure for the whole UK I can’t do this.
Wrong, useless, or both
So here’s where I am for now. I don’t trust the ONS household estimates and I can’t do the tests that I’d need to convince myself that they’re right. For now I won’t be using them and unless the problems I’ve identified are fixed when the ONS take over household estimates in the future I won’t be using those either. There’s a consultation open now; I've sent a link to this blog.
Oh and since you’re still reading here’s some data from Manchester and Leeds proving that building enough homes does make them affordable.
Play around with the data yourself -- the tool we build is free.
Oh wow, you're still reading. You must be really interesting in housing. Or maybe you're just really miserable because of housing. And that means you probably live in South England.
Good news. If South England’s housing crisis is making you miserable, move up here. If you’re good at data analysis and software development I’ll even help you find you a job.