The Data Observatory
The NRLA Data Observatory is a collection of official and other well-established data sources which when combined, provide a narrative of the Private Rented Sector (PRS). The NRLA tracks approximately 45 key data sets which are updated monthly, quarterly and annually. A selection of these data sets appear in these pages.
Our Deep Insight blog provides a regular extension of the analysis which appears here, as well as those datasets which are not published in the Data Observatory section of this website.
The blog pages also features blog posts from other organisations and academics to provide insight on the PRS. Here you can also find more in-depth summaries of our regular reports and surveys.
Growth & the PRS
Chart 1: Change in GDP-measured quarterly
This data shows the impact of coronavirus on the UK economy, and the extent to which the economy has recovered since the unique peace-time blow the economy suffered in the first half of 2020.
Quarter 2 was the largest quarterly contraction in the UK economy since ONS records began in 1955. Quarter 3 was also an ONS record: The revised 16% growth in Quarter 3 was the largest economic expansion since 1955.
Quarter 4 saw more modest growth of 1% - the economy still deep in the Covid-19 crisis. Note that the quarterly growth of 1% is the highest quarterly growth the economy has recorded since the London Olympics in 2012. It is an exceptional quarterly growth (although is still only a component of economic 'bounceback' from 2020). The economy remains 7.8% smaller than at the end of 2019.
Note that GDP is always subject to some revision. The data presented here is based on the ONS GDP first quarterly estimate published in February 2021.
Changes in price indices
Chart 2: Private rental price changes compared to other price indices - April 2021
The chart above focuses on price changes in the economy since 2017. It shows three different measures of price change. Firstly, the Consumer Price Index (favoured by economists as the measure of overall price change in the economy). Secondly the CPIH, this index factors in the housing costs of owner occupiers.
Finally the chart shows the Index of Private Housing Rental Prices (IPHRP) – an index tracking the prices paid for renting property from private landlords in the UK. Like the other price indices, the IPHRP is compiled by the ONS. It is the best available measure of housing costs in the Private Rented Sector amongst both new and existing tenants. This article, written by the ONS explains why this measure is a more complete, more robust measure of price changes in the PRS than other industry-generated measures.
In April the IPHRP index rose fractionally to 110.3 (from 110.2 in March) - UK rental prices in the private sector have grown 10.3% since January 2015 (the base period for the index).
In April the major price story has been the leap in the CPI and CPI(H). Both these indices grew by 0.7 points. Year-on-year inflation (not shown here) was 1.5%pa for the CPI (up from 0.7% in the year to March) and 1.6% for CPI(H) (from 1.0%pa in March). By comparison the IPHRP was just 1.2%pa in April - DOWN from 1.3%pa in March.
Price movements for household utilities, clothing, and motor fuels are the main reasons for the higher monthly rate in the CPI. For CPIH utility bills were also a major reason for the rapid rise.
It should be noted that these indices measure a so-called "basket of items". During the pandemic items in that basket have been less available and this has had an influence on the construction of the index. There is more detail here.
One final thing that is worth mentioning is the technical construction of the IPHRP index. There is more information on this here. Without getting bogged down in the detail, the Index is now looking at rental contracts and prices entirely influenced by the pandemic-shaped world. How the index changes over the next six-twelve months may be very different. It should also be noted that rental growth is not uniform across the country. The NRLA discuss regional differences in the index here.
The IPHRP (Index of Private Housing Rental Prices) is “an experimental price index tracking the prices paid for renting property from private landlords in the United Kingdom.” (ONS). For more information on the IPHRP and how the ONS are planning to make further improvements to measuring rental prices, see this article here.
Wages & the PRS
Chart 3: A comparison between wages & rental prices (Latest figures: Mar & Apr 2021)
This chart shows the growth in real wages (allowing for inflation) against the growth in the IPHRP. Note that the lastest figures here are April 2021 for the IPHRP and March 2021 for wages.
This analysis has previously made comment about how current labour market dynamics are not being fully reflected in the data series.
According to wage data it appears GB workers have never had it so good, with real wages consistently outstripping price indices since August 2020. Though the chart above appears to show some cooling off in apparent wage inflation, the statistics are still presenting real wage growth (in March this was 3.0%pa) as being well above inflation. Wages in March were at either x2 or x3 the rate of inflation (1.5% for CPI; 1.0%pa for CPI(H) in March) depending on which price measure is chosen.
This would also mean real wage growth would also be more than twice the rate of rental price growth. At a micro-economic level, even though the supply side of the PRS is experiencing an increase in landlord confidence, the data hardly reflects a tenant-led boom in demand for property.
Thus wage data would still seem to diverge from labour market reality. As has been said before, contract and lower paid workers are being taken off payrolls, whilst management level employees are returning from furlough. ONS measures of wage growth - this particular measure does not include the self-employed - are just not able to reflect these unique circumstances.
It may not be until the economy fully reopens that the ONS measure of wage growth becomes more reliable as an economic indicator.
[Note: Wage data is prone to revisions, which can be significant, especially during 2020 (and 2021) when labour markets, employment and wages have been subject to furlough schemes and sudden shocks.] Note that the data on wages is based on surveys of employers and do not include self-employed workers.]