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 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 alarming impact of coronavirus on the UK economy.
The ONS state this is the largest quarterly contraction in the UK economy since their quarterly records began in 1955.
They also state the UK is now in the largest recession on record. Latest estimates show that the UK economy is now 22.1% smaller than it was at the end of 2019.
The 20.0% fall in output in April 2020 was the biggest monthly fall on record reflecting widespread monthly declines in output across the services, production, and construction industries.
The data also incorporates “some rebound” in June, where GDP increased by 8.7% on the month.
Note that GDP is always subject to some revision. The data presented here is based on the ONS GDP first quarterly estimate published in August 2020.
Changes in price indices
Chart 2: Private rental price changes compared to other price indices - September 2020
The table above focuses on price changes in the economy since 2016. 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 which 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.
In September the IPHRP index rose slightly from 109.5 to 109.6. This means UK rental prices in the private sector have grown 9.6% since January 2015 (the base period for the index).
It is quite clear from the chart that consumer price growth has levelled off since the latter part of 2018, The trend in rental prices has been one of steadier growth. However, it remains the case that over the last five years the private rental price index has not exceeded the change in other price indices by a substantial amount.
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 why the IPHRP should be the go-to measure of rental price change see this article here.
Wages & the PRS
Chart 3: A comparison between wages & rental prices (Latest figures: August 2020 & September 2020)
This chart shows the growth in real wages (allowing for inflation) against the growth in the IPHRP. It shows the dramatic impact on real wages the coronavirus has had on the economy.
Prior to the virus, the index of real wages grew noticably between Feb 2018 and the summer of 2019. Since the autumn of 2019 however the growth in real wages stalled, this was particularly noticable at the start of 2020.
In August the positive real wage growth (+1.4% year on year) brought to an end a period of five consecutive months of negative annual real wage growth. For those in work, wage levels have recovered but the long term gap between wages and prices remain. The real wage index since 2015 has grown only half as much as each of the the price indices on which we report. The key point is it has been the limited (and volatile) growth in wages which has led to affordability problems in the housing market, and not increases in housing costs.
[Note that in this chart, wages are at a GB level but we selected IPHRP on a UK-wide statistic. This is simply because the two data series have a common base year.] Wage data is prone to revisions, which can be significant. In June for example wage growth was initially -2.0%pa before being revised to -2.3%.
Note that the data presented here is subject to revision and updates which can be considerable. The NRLA may or may not update this post as updates are published.