Dominic Raab has been caught fiddling the figures on house prices and immigration

by Atul Hatwal

Dominic Raab is a fool.

He’s a fool for thinking he could say house prices have risen by 21% because of immigration over the past 25 years and not have to answer follow-up questions on the provenance of this number. It’s a striking figure, of course people are going to ask for the source data.

To not anticipate that his Sunday Times interview would generate a chorus of questions from opposition politicians, journalists and think tankers, shows an amazing inability to think through the political consequences of his actions.

He’s a fool for not understanding that the UK Statistics Authority has a remit to police the misuse of government statistics and that his department, the Ministry of Housing, Communities and Local Government (MHCLG) is mandated to comply with their rigorous code of practice.

A scintilla of comprehension about the role of the Authority would have meant he’d have known that they would publicly slap him down ,as the questions rained down, for not publishing the data and force the department to make it available.

Most of all though, he’s a fool for cherry-picking this figure from research which, now the department has published it, makes the exact opposite point to the one he aired in his interview – immigration actually has a comparatively small impact on house prices.

The research ascribes three factors as driving house price rises: domestic population growth, population growth from net migration and increasing real incomes.

Out of a total increase of £97,000 1991-2016, £80,000 is from increasing real incomes, £11,000 is from population growth driven by net migration and £6,000 from domestic population growth.

Selectively citing immigration as a cause for rising house prices without mentioning the elephant in the room – price rises driven by real income growth – is actively misleading.

The eagle-eyed reader will also note that the number next to the rise in house prices caused by immigration, in the chart above, is 11% not 21%.

That’s because MHCLG has bent over backwards to try create an eye-catching number on immigration and house prices by taking the rise over 1991-2016 as a percentage of 1991 prices. £11,00 is 21% of the 1991 base and so Dominic Raab got his big number for his Sunday Times interview.

Using this base though, the proportion of house price rises caused by real income growth is 150%.

Two final points that render Raab’s number largely worthless.

First, in their analysis, MHCLG have put in a huge, planet-sized caveat as to the veracity of the analysis by excluding any impacts from falling interest rates.

For anyone looking at a mortgage, the interest rate is one of the biggest determinants of affordability and an 11% fall in interest rates between 1991 and 2016 would surely have an enormous impact on demand and so house prices.

An earlier iteration of the MHCLG model, which applied from 1991 to 2007 and is referenced in the department’s analysis, posited that a 1% decrease in interest rates would lead to a 3% rise in house prices.

Factoring in anything like that relationship between interest rates and house prices would push the proportion of house price inflation attributable to migration, into single digits.

But nothing about interest rates has been included in the calculations.

Second, the government’s Office for Budget Responsibility has looked at the role of immigration on housing supply and concluded its not sufficiently material to factor into their model. They say,

“Evidence suggests that restrictions on housing supply relate more to policy restrictions via the planning system than a genuine shortage of land for building”

It’s notable that planning and its impact on housing supply and prices is also ignored by the MHCLG analysis.

The coda of this tale is that Dominic Raab is a wannabe Eurosceptic leader with very bad political judgement.

He attempted some sleight of hand with the statistics to serve his political ambitions and got caught in the most obvious and predictable manner possible. Slow hand clap for all on team Raab.

Atul Hatwal is editor of Uncut and Director of the Migration Matters Trust

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