Using Census data to derive a new area-based measure of deprivation - Section 5: Housing tenure

Section 5: Should housing tenure form part of a composite measure based on the Census?

As we discussed earlier, the relationship between income and housing generally indicates that it is low levels of income that drive housing outcomes, rather than vice-versa. This is also noted in a report by the Joseph Rowntree Foundation (2015). However, one of the key features of the UK housing market over recent decades has been the growing proportion of households in the private rented sector. The continued rise in rental costs combined with stagnating wages has meant that housing arrangements can lead to more people entering poverty once living costs are taken into account, with this particularly being the case for those in (private) rental accommodation.

We therefore carried out a sensitivity analysis to see how the inclusion of a variable relating to housing tenure in our composite measure altered our findings. Hence, we began by creating a field that indicated the proportion of households in an output area that were either privately or socially renting their accommodation. A principal component analysis was then carried out using this variable, alongside our two indicators on education and occupation. The correlation between a composite index including housing tenure and one created using only education/occupation was 0.97. Typically, when attempting to determine which areas to target, organisations will tend to concentrate first on those in the bottom quintile. We therefore also assessed how the bottom quintile of our composite measure inclusive of housing tenure differed to one based on only education and occupation. A two-by-two matrix of the findings is illustrated in the table below.

Table 2: Cross-tabulation of our measure formed using occupation and education only against a measure using occupation, education and household tenure. Figures represent output areas.

However, when using MSOA income data for England and Wales to evaluate the incomes of those in the bottom quintile of the two composite measures, we observed that the mean net equivalised weekly household income after housing costs was marginally lower in the bottom quintile of a measure based on education and occupation alone at £360.13 compared to one that included housing tenure for which the mean figure was £364.24, with Table 3 helping to demonstrate why this is the case. Both had median values of £360. There is therefore no strong theoretical or empirical evidence to suggest that including housing tenure can improve our measure. 

Table 3: Cross-tabulation of our measure formed using occupation and education only against a measure using occupation, education and household tenure. Figures represent mean net equivalised weekly household income after housing costs in England and Wales (£)

Next: Section 6: How does our measure compare to the Indices of Deprivation?