PRS Statistics Bulletin – October 2017
Welcome to the October PRS Statistics Bulletin from the RLA Private renting Evidence, Analysis and Research Lab (PEARL). We have rounded up all of the latest housing statistics and data updates from across the private rented sector and compiled them into one easy to digest bulletin. This month we have a smaller update with the latest monthly figures regarding house prices, private rents, and buy-to-let mortgage activity.
PRS Evidence Dashboard Update
In October there were updates to the following data-sets and indices:
- Index of Private Housing Rental Prices (IPHRP)
- Consumer Price Index (CPI)
- House Price Index
- Average Weekly Earnings
- Mortgage Activity (Value & Number of Buy-to-let mortgages)
You can find the updated statistics displayed on our PRS Evidence Dashboard here.
Index of Private Housing Rental Prices (IPHRP)
The latest Index of Private Housing Rental Prices (IPHRP) shows that private rents increased in Great Britain by 1.6% in the 12 months to September 2017. This figure remains unchanged on the previous month, before this the IPHRP had remained at 1.8% for 4 consecutive months. Overall, the slowdown in rent prices is being driven by the London rental market, where continued caution and uncertainty is disrupting the housing sectir,
Across Great Britain there were varying rental price changes in the 12-month rate to September 2017:
- England rental prices grew by 1.6%
- Wales rental prices grew by 1.4%
- Scotland rental prices grew by 0.3%
- London rental prices grew by 0.9%
Great Britain and the countries within have all experienced rental price growth since 2011, however, rental prices have grown more in England than in Scotland and Wales. In Scotland, rental price growth has weakened since June 2015 and has remained near to 0% growth since August 2016. While Wales has experienced stronger rental price growth since November 2016, rental price growth in Wales has increased to 1.4% for the year to September, in comparison to 1.3% for the past two consecutive months.
The latest data is indicating a slowdown of rental prices across Great Britain since 2015, and this slowdown is being significantly driven by the London market. Rental price growth has slowed to 0.9% in London, which is 0.7 percentage points below that of Great Britain. In comparison to the previous month, rental prices have decreased a further 0.3 percentage points. If the London slowdown continues at the same rate we will see rents in negative growth by the start of 2018. Rent decreases would be a welcome to tenants who are already paying significantly higher rents than other regions, especially as inflation rises. However, with many landlords potentially submitting their first tax return in January since the Mortgage Interest Relief changes, we may find increasing amounts of landlords attempting to pass the increased costs onto tenants.
The strongest regional rental growth was in the East Midlands with rental growth of 2.9% for the year till September 2017, followed by the South East with rental growth of 2.5%, and, then the East of England with rental growth of 2.4%. The weakest regional rental growth was in the North East with rental growth of 0.4%, followed by London with rental growth of 0.9%, and then the North West with rental growth of 1.3%.
Consumer Prices Index (CPI)
The Consumer Prices Index 12-month rate increased to 3% for September 2017. In comparison to the IPHRP for Great Britain, inflation increased by 1.4 percentage points more than private rents for the year until September 2017.
House Price Index
In the year to August 2017, average house prices in the UK increased by 5%, up from 4.5% in July 2017. UK house price growth has slowed since June 2016 (from 8.2%) and has now stabilized at around 5% for 2017 so far. Growth in UK house prices was contributed mostly from growth in England. Across the UK, house price change for the year to July 2017 was the following:
- England house prices grew by 5.34%, with the average house price now at £243,520
- Wales house prices grew by 3.35%, with the average house price now at £150,258
- Scotland house prices grew by 3.88%, with the average house prices now at £146,354
- Northern Ireland prices grew by 4.38%, with the average house prices now at £128,650
Average Weekly Earnings
In the year to August 2017, Average Weekly Earnings (AWE) Regular Pay increased by 2.2%, with average weekly earnings increasing to £476.
Buy-to-Let Mortgage Activity
Buy-to-let lending activity in August 2017 remained at 6,200 buy-to-let purchases, which has remained unchanged from the previous month. This figure has also remained relatively unchanged since October 2016. The number of buy-to-let mortgages for new house purchases has not recovered from the Stamp Duty changes, and are well below the number for May 2013 (at 6,900). Remortgaging activity is current higher than buy-to-let purchases, with 12,900 remortgages in August 2017. This has remained relatively consistent since June 2015, apart from a spike in Q1 2016.
The data is showing continued trends towards the impact of government intervention on the sector. It is becoming clearer that the stamp duty and mortgage interest relief changes have hampered the previous strong growth in the private rented sector.
Updates from across the sector
Royal Institution of Chartered Surveyors
The latest RICS UK Residential Market Survey for September 2017 indicates continued uncertainty and a lack of momentum across the housing market for the UK. The report discusses that expectations for house prices are significantly negative, with the net balance at -8%. RICS report that the 12-month expectations for house prices is the most downbeat since the start of the reporting.
In regards to the PRS, the figures from RICS continue to illustrate a lack of supply, with landlord instructions declining. Due to this imbalance to supply/demand in the PRS, RICS predict there will be further increases to rental prices over the next 12 months.