Perils of perception: 10 things people think about housing

What's the average UK house price? How many people live in social housing? And what's the average deposit put down when buying a new home? Perceptions are often very different from reality, says Ipsos research director Ben Marshall.

Back in 2013 we researched what people in Britain knew about the basic make-up of their country and the scale of key social issues. We found that they are often very wrong – for example, over-estimating the extent of immigration, teenage pregnancy and welfare fraud.

We repeated the study across 14 countries last year and found this wasn’t a peculiarly British phenomenon. Then, back home, we published new research this week on financial issues,  finding that it’s the cost of the big life events – like having children, going to university and retiring – that we underestimate.

On behalf of the Chartered Institute of Housing, we used some of this new data and reviewed several existing sources dating back to 2009 to identify 10 important perceptions - and in many cases misperceptions - relating to housing:

1. There is a strong sense of housing crisis - In January this year 76% of British adults agreed that there is “a housing crisis in Britain” but only 46% thought the same applies to their local area.
2. The extent of owner-occupation is under-estimated - In 2012 only 28% of the public correctly thought that two-thirds or more of British adults were owner-occupiers.
3. People are pretty accurate in terms of the average UK house price - The average answer given last month was £190,000, close to the true cost of £194,166.^[i] There are large regional differences here though; 29% of Londoners think the average UK price is over £300,000, a likely reflection of the high prices in the capital.
4. They under-estimate the extent of house price rises (depending on the measure) - Again last month, and on average, people think prices rose 3% over the previous 12 months (having been given Halifax’s May House Price Index as a benchmark). According to Halifax, the real change was 11%.^[ii] 
5. They significantly under-estimate the average up-front deposit put down by a property buyer in Britain - The average given was £20,000, less than a third of the £72,000 actually required.^[iii] Only 1% suggested a figure between £70,000 and £79,000.
6. They think that the upper income thresholds for intermediate housing options (like shared ownership) are much lower than they actually are - Asked in 2009, potential customers of intermediate housing in London thought the ceiling, on average, to be £25,000, much lower than the real (at the time) £60,000. 
7. Rent levels outside London are under-estimated - The average private sector rent outside London in England and Wales is £761, higher than the public’s £600 average (covering all rents). For London, the equivalent was £1,166, a little higher than the public’s average estimate of £1,000.^[iv]
8. The scale of social housing is over-estimated - A survey for #HousingDay in 2014 found that, on average, English adults think that 39 out of 100 of their contemporaries live in social housing, more than double the real figure of 15.
9. New builds are considered to be more expensive, and smaller than existing homes - Just under half of British adults think that new builds are at least 6% more expensive than comparable second hand property, while other research has found a perception that they are smaller.
10. The extent to which the country is already developed is over-estimated - Two-thirds of English adults think a quarter or more of the country is already developed (described as already built on). The real figure is 10% or less depending on definition.^[v]

So while people recognise the housing crisis, they are unaware of the scale and nature of many of its key features. They are fairly accurate on house prices, but are unaware of the scale of the different tenures as well as under-estimating the affordability gap. In some cases the public don’t know how bad the state of housing in Britain is, in others, perhaps, how good some of the solutions might be.

This matters to those interested in, among other things, expanding home ownership or increasing housing supply. Research points to social norms influencing behaviour – and in the housing sphere, for example, people’s assessment of situations might shape their propensity to buy or sell property, take on mortgage debt, buy new-build properties or consider shared ownership. As well as having significant ramifications for the market, perceptions could shape people's receptiveness to policy.

There are likely to be all sorts of reasons why what people think is the case differs from reality. For example, errors will be influenced by information and impressions from a number of sources, and some explanation is likely to be found in our ‘emotional innumeracy’; our inaccuracies are shaped by what is worrying us – we believe what we want to.

I think the message for the housing industry is that we need to better understand the context to attitudes and behaviours, and try harder to achieve clear, consistent and compelling communications.

[i] Source: The average figure for May 2015 is £195,166. Data are drawn from Nationwide’s house purchase mortgage lending at the post survey approvals stage. Data are also seasonally adjusted. N.B. there are multiple measures of house price averages.

[ii] Source: Halifax HPI (April 2014-April 2015). Again, there are multiple measures of house price averages (and some record smaller rises of 3-4%).

[iii] Source: Mortgage Advice Bureau.

[iv] Source: LSL Property Services Ltd.

[v] See http://www.bbc.co.uk/news/uk-18623096

The article was published in www.cih.org