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
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
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 other price indices, this latter data set 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 May, the IPHRP index rose to 109.3 – meaning UK rental prices in the private sector have grown 9.3% since January 2015 (the base period for the index). Rental prices have now risen more since 2015 as either of the wider price indices on the chart. The CPI has risen 8.6% over this period and the CPIH a slightly higher 8.8%, rise. The key point is however that, over the longer time period, the three indices are pretty closely aligned with one another.
Though not shown here, the annual rate of change of the IPHRP is again significantly above that of the other two indices. The IPHRP for the twelve months to June remained at 1.5%. This is the third consecutive month this index has shown annual growth of 1.5%.
For the CPI and CPIH, annual growth remains below 1% (0.6% & 0.8% respectively) - last June the CPI was running at 2% pa and the CPIH was 1.9%.
It should be noted that annual growth in the IPHRP has lagged the other two indices for 14 of the 15 months previous to April. In April & May the coronavirus has had a dramatic impact on the economy. This has yet to feed into rent levels agreed in advance of the crisis.
It is also important to note that recent increases in LHA rates have effectively raised the floor in local rents. Finally, it may be that policies such as the Tenant Fees Act & local licensing are feeding through into sustained rent increases.
- For more detail on latest price changes – please see the ONS web site 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 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
This chart shows the growth in real wages (allowing for inflation) against the growth in the IPHRP. The impact of coronavirus on real wages has been dramatic to say the least.
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 March – the final week of which saw the economy lock-down with the coronovirus – real annual wage growth was negative for the first time since June 2018.
April however saw real wages reduce dramatically – and this continued into May. In May annual real wage growth was -1.9% pa. There was however a slight up-tick in the month-by-month index in the chart above. It is far too early to say whether real wages will now recover lost ground.
Following a period in which the gap between real wages and rental prices narrowed, it is clear that the gap in 2020 is widening considerably. The gap between the two indices - wages and rental prices - is now at its widest since the base year (2015).
[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.]
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.