"Chart 8: Rental costs have also risen"

Richard linked to this speech by some Bank of England bod, who was trying desperately to prove that UK house prices are not in a bubble etc. Well, he would say that wouldn't he?

Chart 8 is handy. It shows how rents have risen as a share of income over the last forty years. The chart heading, referring to rents as "costs" is misleading, because from for landlords, landowners and bankers, rental income (or potential selling price, or potential mortgage interest) has risen.

This is the important point: taking society as a whole, rents (and mortgages) paid are neither costs nor income, rents are a government-engineered transfer of wealth from producers to a self-selected narrow group of consumers, and the more the producers produce, the easier for these consumers to skim some off for themselves. It's like the "bloated welfare state" but about five times bigger and with a terrible veneer of respectability.

The steepest increases appear to be during recessions, which is probably because wages fall faster than rents during recessions, but the overall trend is clearly upwards: