Growth & the PRS
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.
GDP
Chart 1: Change in GDP-measured quarterly
Change in Real GDP - UK economy
The UK economy continued to grow in the second quarter of 2024. The ONS report that UK GDP rose by 0.6% (first estimate) in Qtr 2, following growth - revised upwards - of 0.7% in Qtr 1. When looking over the last year, the economy has grown 0.9%.
Growth is being driven by the service sector. The largest contributor to service sector growth is in the professional, scientific and technical activities subsector. Manufacturing continues to struggle: The ONS report manufacturing was the largest negative contributor with 9 out of the 13 manufacturing subsectors showing falls in Qtr2.
The construction sector output fell for the third consecutive quarter, though the ONS believe “the rate of decline in construction is easing”
OECD data shows that in Qtr 2, UK growth was behind only the United States and Japan in the G7. During the 2023 calendar year, the UK growth (0.1%) was ahead of Germany, but behind the other G7 partners.
Changes in price indices
Chart 2: Private rental price changes compared to other price indices
Comparing PIPR & Inflation
Note: All index numbers rebased to Jan 2019
The chart above focuses on price changes in the economy since 2019. It shows the PIPR index - which measures private rental prices - in comparison to two wider price indices (the CPI and CPI-H). Each of these wider measures collects price data from across the whole economy, the latter placing a greater weight on housing costs.
The above chart tracks price movement on a month-by-month basis using index numbers. This shows how prices have moved each month using data collected by the ONS. The more widely reported annual indices provide a snapshot of the latest available price information, compared to prices twelve months ago.
This month the PIPR index rose 0.7% on the month to the end of June (the same as that in the previous month) and (not shown) 8.6% on the year up to the end of June.
Though the annual growth was down only slightly from 8.7%pa at the end of May, it is the third consecutive month in which the annual rate of price increase in the PRS has fallen since its high of 9.2%pa in March.
The annual rate of rental inflation – 8.6%pa - is currently well ahead of major indices (2.0%pa for the CPI and 2.8%pa for CPI-H). In the first six months of this year, the rental price index has risen 3.7% (Jan-Jun) whilst in the same period CPI grew just under 2%.
Footnotes
Earlier this year the Index of Private Housing Rental Prices (IPHRP) was replaced by the ONS as the measure of rental price inflation.
Its replacement, the Price Index of Private Rents (PIPR), has a completely different methodology. It is also possible now to monitor changes in rental values in a specific local authority area. The ONS has also enhanced its house price index data and now publishes analysis of both datasets alongside each other.
The IPHRP is no longer calculated.
For more detail on UK-inflation see this report by the ONS.
The Price Index of Private Rents (PIPR) measures private rent inflation based on data from over 500,000 rent prices across the UK. The PIPR is based on achieved rents for both new and existing tenancies.
More information on PIPR and the methodology can be found in this December 2023 article.
The CPI is a measure of consumer price inflation. It is the preferred measure for inflation targeting and uprating state pensions and benefits. CPI is also the international standard for comparing inflation rates between countries.
The CPIH meanwhile gives added weight to the housing costs associated with owning, maintaining, and living in one's own home. CPIH also includes Council Tax. The ONS describe the CPI(H) as “the most comprehensive measure of inflation.”
Wages & the PRS
Chart 3: A comparison between wages & rental prices
A comparison of real average weekly earnings and rental growth
Great Britain (Jan 2019=100)
Chart 3 shows a comparison of real wages (allowing for inflation) compared to rental prices.
Year-on-year real wages (Average Weekly Earnings) continue to show an increase on a twelve-month basis. In May real wages grew 2.1%pa.
Real wage growth is down on the annual growth in April (a month in which wage growth was revised upwards to 2.4%pa). However, May has turned out to be the thirteenth consecutive month in which real wages have grown. This follows a period of thirteen consecutive months in which annual real wages fell.
More information on wages in Great Britain can be found in this ONS analysis.