Eurostat: UK rental markets among the most expensive in Europe
Firstly, a note on the report’s methodology. Eurostat try to compare like with like. They do this by selecting rental properties of a broadly similar standard, in neighbourhoods that are broadly similar in terms of their amenity levels. The kind of neighbourhood they are interested in could be described as “well-to-do but not absurdly posh”. for example, their London index includes Islington and South Kensington, but not Mayfair or Chelsea. It is not meant to be representative of the city as a whole: it is, by design, a biased index. But it still suitable for comparing rent levels across cities, because it displays the same bias everywhere, so the biases should cancel each other out.
In other words, it’s not especially suitable if we are interested in absolute rent levels, but very much so if we are interested in relative ones.
It shows, once again, that London is the most expensive city in Europe: London is more than twice as expensive as, for example, Munich, Helsinki, Madrid, Lisbon, Berlin, The Hague, Prague, Vienna, or Rome.
“So what?”, I hear you say. “London isn’t Britain. Why does everyone think they have to live in London? Just move out, if you can’t afford it! There. Problem solved.”
I have never found this argument terribly persuasive. London is, for better or worse, the most prosperous and productive part of the country, so it is not some fanciful indulgence if people want to move there: it is a perfectly reasonable response to the country’s economic geography.
But let’s forget London. The report also contains data for Reading, which, while still, in the widest sense, part of the London orbit, is much closer to a “normal” British city (although the report is not meant to be about “normal” cities). And indeed, as we move from London to Reading, rent levels drop by almost half. However, Reading is still more expensive than Oslo, Bern, Munich, Helsinki, Madrid, Lisbon, Berlin, The Hague, Prague, Vienna, or Rome, and not a million miles behind Paris. UK properties, both in London and Reading, are also at the lower end of the list in terms of space, so if these rent levels were expressed in per-m2 terms, the UK would appear even more expensive still.
The UK, in other words, may well be the most expensive country in Europe in terms of rent levels.
It is possible that a more representative study, which looked at, say, a dozen cities across each country rather than just two, would come to a different conclusion. But even if that were the case (and it may not be), that would still not mean that there is no problem here. Even if the affordability problems in the UK’s rental markets were heavily concentrated in specific regions, rather than being nationwide problems, that would still be a huge constraint if the affected regions are also the most productive parts of the country. It would mean that people could only avoid those affordability problems by avoiding the country’s most productive regions, thereby depriving themselves, and the country as a whole, of economic opportunities.
Britain’s housing crisis is not just a problem for those who find themselves at the sharp end of it. It has also become a serious drag on the country’s overall prosperity. By allowing this problem to fester, we are needlessly making ourselves poorer.