A Nation of Real Estate Agents

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I read a series of articles related to the goings of the UK housing market, the likely effects of the new Help To Buy scheme, the 10% increase in mean London house price over the last year, and employment statistics. I failed to reproduce some numbers cited in the economist (below). This post talks about this.

It all starts with this blog post on the economist:


It talks about many things, amongst which employment and housing completions, and how the UK seems likely to be embarking on another round of debt-fueled growth. I combined house completions and employment in construction and real estate industry into a single plot against time.

In the bottom panel, I find the increase in jobs in the real estate agents sector quite dazzling. In the top panel, you can see completed houses over time, split by who actually built them. I think HA (Housing Associations) and LA (local authorities) can be viewed as “public”.

The economist blog has a quote from a report by Fathom Consulting:

The real estate sector accounts for almost of quarter of all the jobs created in the UK over the year to June. The rise in real estate employment in the latest quarter is the strongest on record. Over the past year the number of real estate jobs has risen by 77,000, the number of construction jobs is 1,000 higher, manufacturing is 14,000 lower. The number of real estate jobs is now at a record high – 100,000 more than at the peak of the boom in the summer of 2008. The number of construction jobs is more than 300,000 lower than its peak.
And so, the UK is going from a nation of shopkeepers to one of real estate agents. I had a look at this report of Fathom on the likely impact of Help To Buy (very interesting – no model description, see below), but couldn’t find the one on the employment numbers cited above. The economist says it’s in a “splendid piece of research last week”, I couldn’t find anything resembling that. Probably my fault. Or not.

By the way, the same citation appears in the telegraph.

I was unable to reproduce those numbers. My numbers are ONS employment statistics, table JOBS03, UK total. Everything is linked and document in my code.

My R code is in this github repo in a file called UKjobs.r

It would be interesting to know why our numbers are so different. I find an increase of “only” 28.000 real estate agent employees in the last year, as opposed to Fathom’s 77.000. Even worse is my figure for change in that sector relative to summer 2008, with Fathom put at 100.000. I find a much more modest 21.000 increase of jobs in estate agents. This graph plots the difference of employment with employment in summer 2008 for both estate agents and construction.

There is no doubt that regardless of the eventual magnitude, this trend is striking. 

I have got to say though that the way the economist and Fathom put those numbers out there is strange. No source, no code, nothing. 
Notice that I’m not trying to say Fathom Consulting juke their numbers or don’t do proper work (impossible to tell), most likely they just defined “Real Estate Sector” in a different way (I just took the column headed “Real Estate Sector”), or we used a different data set or whatever. 

But without knowing all of this, how I am to judge those informations? Of course I couldn’t read their report (because that is only for paying customers, presumably containing all of those details), but the Economist uses them without any further qualifications. 

I think that in general, it would be very useful to have this metadata in a section on any Consulting’s website, particularly if they get cited in the media. I can see that they want to sell their work to customers, but if they want to be participating in the public discussion, which is clearly in their interest, this stuff must be verifiable. 

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