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 impact of coronavirus on the UK economy, and the extent to which the economy has recovered during the thrid quarter 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 15.5% growth in Quarter 3 was the largest economic expansion since 1955.
However, the level of GDP in the UK is still 9.7% below where it was prior to the pandemic at the end of 2019. Compared with the same quarter a year ago, the UK economy fell by 9.6%. This is well below the levels experienced in other post-war recessions.
In Quarter 3 2020, construction output increased by 41.7%. However, the level of construction output remains 11.5% below its level in Quarter 4 2019, following a 35.7% decline in the previous quarter. Private new housing was the largest contributor to growth in the third quarter. The ONS point to intelligence to indicate much of the activty was to complete projects rather than starting new projects.
Note that GDP is always subject to some revision. The data presented here is based on the ONS GDP first quarterly estimate published in November 2020.
Changes in price indices
Chart 2: Private rental price changes compared to other price indices - November 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 November the IPHRP index rose to 109.8. This means UK rental prices in the private sector have grown 9.8% since January 2015 (the base period for the index).
Rental prices in 2020 have not increased as much in 2020 as in 2019, the slower growth is more notiable over the last six months. This year growth in private sector rents from June-November has been 0.46%. For the same six months in 2019, growth was 0.56%.
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: October 2020 & November 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 Coronavirus has had on the economy.
It is clear on the chart how wages fell and then rose dramatically over the summer and autumn of 2020.
In October real wage growth rose by 2.6% in the twelve months to October. This is the third consecutive month annual real wages have grown. And the October indexed figure for real wages is the highest level since 2015.
Average real wages across Great Britain were reported as being £514 per week with average weekly earnings (unadjusted for inflation) being £560pw (this figure is seasonally adjusted).
The measure presented here is derived from company payrolls. The ONS believe the strengthening of annual growth in employee pay reflects (i) more employees returned to work from furlough and (ii) the effects of a fall in the number and proportion of lower-paid employee jobs - at least some of the recent rise in average wages will, unfortunately, be due to lower paid staff losing their jobs and falling off the company payroll. There is more about current trends in average wages in Great Britain here.
[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, especially during 2020 (and 2021) when labour markets, employment and wages have been subject to furlough schemes and sudden shocks. In September for example wage growth was initially 1.4%pa before being revised to 1.8%pa. Note that the data on wages is based on surveys of employers and do not include self-employed workers.