The economy is continuing on a bumpy growth path. The current annual rate of growth has fallen to just 1.1%pa – down from 1.2%.
In December, the IPHRP index rose to 108.5 – meaning UK rental prices in the private sector have grown 8.5% since January 2015.
UK private sector price increases are now level with the two main economy-wide price indices, the CPI and the CPIH. This is the first time this happened since March 2019.
In terms of annual price growth, the IPHRP shows private rental prices grew 1.4% in the year until December -the same as for November. Compared to the annual level of price rises in the wider economy, it is slightly above the CPI (1.3%) and identical to the CPIH (also 1.4%), which includes owner-occupiers’ housing costs.
Note how, at the end of 2016 the IPHRP becomes less steep and the gap between it and the other indices narrows.
In March 2019 the IPHRP fell BELOW the other price indices. The most recent data for December 2019 shows this has now ended.
This chart shows the growth in real wages (allowing for inflation) against the growth in the IPHRP.
Real wages which have been growing quite noticably since Feb 2018, have stalled in October (the latest month for which there is data) with the index at 104.0 for the second consecutive month.
With the growth in the IPHRP in November, the affordability gap has grown a little. It should be noted however wage data in particular can be subject to some fluctuation
Prior to the recent growth in real wages, a gap had opened up between rental prices and wages: But as the graph shows, the increasing gap between PRS affordability and income was a product of low real wage growth rather than a rapid growth in rents.
[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.]
The above chart highlights how crucial the PRS is in the supply of homes.
Of the 38 quarters covered by the table:
Though not shown, in Q1 2010 the number of social housing dwellings completed was 6,910. This was a level rarely exceed until 2015. However this level has been exceed in the last seven quarters.
Nevertheless, since 2016 only around 100,000 dwellings for social housing purposes have been completed – with fewer than 16,000 of these being Local Authority built.
This chart shows the growth experienced by the PRS – and the present levelling off of that growth trend.
This is our new Landlords’ Confidence Index (LCI), providing analysis on the key decisions and motivations driving the PRS.
The Landlord Confidence Index breaks down what landlords are telling us in each region.