Do we actually want to be a society of homeowners?

High rates of home ownership have large negative effects on the labour market. Why are we trying to boost it?

It is widely understood that Britain's housing market is (how to put this delicately) sub-par.

Nearly everyone agrees that there are problems which need fixing. We have a society built around homeowning, in which the average age of a first time buyer is inexorably rising. We have a social housing system which involves the state paying rents to private sector landlords, even as private sector rents are rising faster than inflation. We have a planning regime which is slow enough to deliver judgments that it encourages developers to create "banks" of property with permission, just in case the time comes to build. And widespread as these problems are, they are an order of magnitude worse in London and the South East.

But while there's agreement on the problems – and much discussion about what policies might ease them – there's far less examination of what the ideal housing market would look like.

Would homes be owned by individuals, companies or the state? Would multifamily accommodation (blocks of flats, in other words) make up a higher proportion of the housing mix, or is our love affair with the house permanent? How acceptable is flat sharing? What about room sharing? What are the minimum standards we should accept from new builds? Is the problem that mortgages aren't available, or that house prices are too high? Is the solution to insecure tenancies more secure tenancies or fewer tenancies full stop?

These questions seem uncomfortably micro-level to be discussing, but at least some of them are crucial to answer before we can make a real stab at implementing effective reforms to housing policy. And the most important one of all is the one which no-one wants to address: why do we want to own our own homes?

Obviously, given current policy, the answer is clear. The last two decades have been about shoring up the housing market, guaranteeing house prices will never fall, and making it easier to buy in. Conversely, renting has remained as insecure as ever, but with more and more people renting more and more houses, it's a landlord's market.

But if policy could be reformed to make it harder to buy a house but in a way which made renting a far better choice, should it?

One way to answer the question is to look at the wider effects of owning or renting your home. A paper from our own David Blanchflower and the University of Warwick's Andrew Oswald does just that, examining the effects of high rates of home-ownership on one aspect of the economy: the labour market.

Oswald argued twenty years ago that a lot of people owning their own houses would result in higher rates of unemployment. The reasoning is intuitive: a home is a burden, keeping you tied to one place; and a mortgage keeps you tied to a minimum salary. Insofar as it is easier to move out of a rental property than it is to sell a house and buy a new one, we would then expect people who own homes (all else being equal) to be less flexible about the sort of work they can take – and so we'd expect them to be more likely to be unemployed.

Aggregate it up, and we would expect economies with higher levels of home-ownership to have higher unemployment rates. And that's what Blanchflower and Oswald have found:

We find that rises in the home-ownership rate in a US state are a precursor to eventual sharp rises in unemployment in that state… A doubling of the rate of home-ownership in a US state is followed in the long-run by more than a doubling of the later unemployment rate.

Oswald's 1990s argument is backed up by the fact that areas with higher ownership have lower mobility – as we would expect – but there are two further effects that the authors find.

The first is that high home-ownership areas have longer commute-to-work times. That could be because home-ownership tends to promote less dense housing, due to the difficulties in selling rather than renting multifamily accommodation, and the contrary difficulties in renting rather than selling single houses.

The second is that high home-ownership areas have lower rates of business formation. The authors speculate that "this may be due to zoning or NIMBY effects", and offer it as a point for future research.

The conclusion, that "the housing market can generate important negative externalities upon the labor market", poses some tricky questions for nearly everyone discussing housing policy in Britain today. We may still want to build more, lower rents, and improve quality of life for tenants; but this research suggests that, rather than making it so that more people can buy their homes, we should make it so that more people don't feel like they have to buy their own homes. In short, make renting fairer, not buying easier.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Low turnout may not be enough to save Zac Goldsmith

Demographic patterns in mayoral elections do not replicate those at general elections. 

It is a truism in politics to say that older people vote. Almost exactly a year ago - the day before the General Election - ComRes published a briefing note for our clients pointing out that with large leads particularly amongst older people, as well as among the affluent and those who owned their home, the Conservatives were in the dominant position as the country headed to the polls.           

Turnout is one of the most difficult parts of polling to get right, but history was unequivocal in suggesting that these groups were overwhelmingly the most likely to vote in a General Election. This gave David Cameron the advantage, whatever the headline numbers in the polls were saying, and Labour would need a change in behaviour of historic proportions in order to make it to Downing Street.           

It is in the same spirit that a number of commentators have written articles raising the prospects of an upset in the election for Mayor of London. Different arguments have been used, but the central thrust has tended to be that, despite Sadiq Khan’s lead overall, there are turnout advantages not picked up in polling which benefit the Conservatives and which could produce a shock result.            

This is the first point made by Asa Bennett when advising “Don't write Zac Goldsmith off as London Mayor – he can still win this thing”, while Adam Bienkov has suggested that a low turnout “will inevitably help the Tories, whose voters tend to be older, wealthier and more likely to turn up to the polls.”           

While these arguments make intuitive sense, they make one fatal assumption: that demographic patterns in mayoral elections replicate those at general elections.           

Firstly, it is important to point out that there are no exact numbers on who actually votes at elections. The paper copies of marked electoral registers are kept separately by local authorities and contain no demographic information anyway.            

Instead, we know who votes in General Elections because in places where the population is older, turnout tends to be higher than in places where it is younger. Communities with more middle class and affluent constituents have higher turnouts than more deprived areas.      

The graphs below show the relationship between the socio-economic make up of a constituency’s population, with the proportion of people who turned out to vote at the last General Election. As can be seen, the higher the proportion of constituents who come from the most affluent AB social grades, the higher the turnout was in the constituency. On the other hand, turnout was lower the higher the proportion of a constituency’s population came from the least affluent DE social grades.

Now this all fits with expectation. But the rub comes when we run a similar exercise on the last mayoral election in 2012. If we look at the age profile of individual electoral wards, we would expect to see those with a higher proportion of older people have a higher level of turnout at the election. “Older people vote” after all.

But if we look at the data, a different picture emerges. The graph below shows all the wards in London, and the relationship between the proportion of people aged 55 and over in that ward, and the proportion of people who turned out to vote. And the picture is surprising but clear: there was almost no relationship between age and likelihood to vote at the last mayoral election. 

As the graph shows, there is a very slight incline upwards in the trend-line as the proportion of 55+ constituents increases, but the fit is very loose. The individual data points are scattered all over the place, far from the line and indicating an extremely weak relationship – if any at all (this wouldn’t pass a statistical test for the presence of a correlation).

The case is similar if we use with proportion of 18-34 years – or for that matter, the proportion of a ward’s population which owns their home. Despite some commentators suggesting homeowners are more likely to vote, the data suggest this is not the case at mayoral elections.

Another common trope is that “the doughnut may yet do it” for the Conservatives, with turnout being lower in inner London, where Labour does better, and higher turnout in the leafy suburbs therefore delivering victory for Zac Goldsmith. Again though, this claim does not really stand up to reality. If we look at average turnout in inner and outer London boroughs, it has not been noticeably higher in the outer ring of the doughnut since 2004. In fact, at the last mayoral election, average turnout was slightly higher in inner London boroughs than it was in outer London boroughs.

There is one final possibility, which has become a higher profile issue in the current contest than in the past: that there is a racial element in Londoners’ likelihood to vote. This is important because Zac currently leads Sadiq Khan by seven points among London’s white population, but is 31 points behind among BAME Londoners. If white Londoners were much more likely to vote therefore, there is an outside possibility that Zac Goldsmith could sneak a result.

Once again though, the data suggest this is not the case – there was very little relationship between a ward’s ethnic profile and its level of turnout at the last mayoral election. The predominantly white wards on the left hand side of the chart below include the wards with the highest turnout – but also most of the lowest. There is little to suggest that the predominantly BAME wards necessarily have a lower level of turnout than the London-wide average.

Overall then, there is little relationship between turnout at mayoral elections and age, home ownership, suburbia or ethnicity. It is within this context that much of Zac Goldsmith’s campaign, which has raised controversy in some areas, should be seen. Seeking to link Sadiq Khan to Islamic radicalism is not necessarily about trying to get people to change how they will vote, but more to provide an incentive for older voters in outer London to go out to the polling station and to drive up turnout among Conservative-leaning groups.

In turn, the hope is also to reduce the motivation to vote among Labour-leaning voters by creating an element of doubt in the back of the mind and to dampen enthusiasm (“Meh – I’m not sure I want him to be elected anyway”). The leaflets targeting Hindu and Sikh households are perhaps also similar examples of this - if not converting your opponent’s voters, at least reducing their affinity to him (or her).

Of course, it could also have the opposite effect. Rather than making Labour-leaning voters less likely to vote, Goldsmith’s campaign may have provided them with more of a reason to make the trip to the polling station, in order to stop a campaign they see as racially-charged and a threat to London’s status as a beacon of successful multiculturalism.  

Either way, if such tactics are to work, the Conservatives will need to overturn the turnout trends seen in 2012 to a very large extent. 

London is famously a city where relative wealth and deprivation sit closely alongside each other. Mews housing Georgian terraces meander into streets containing chicken shops, homeless refuges or council estates; Londoners of all backgrounds subscribe themselves to the same crush of the Tube at rush hour. For whatever reason, London also has not the stark variations in propensity to vote between different social groups seen in national elections. Turnout may hold the key for Goldsmith, but it would represent a rupture of historical trend, rather than an expression of it.