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%.
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 hosuing 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 others, this index is compiled by the ONS and is the best available measure of housing costs in the Private Rented Sector amongst both new and existing tenants.
These data indicate a pull back in private rented sector price growth, following modest but steady growth in 2019.
In February, the IPHRP index rose to 108.7 – meaning UK rental prices in the private sector have grown 8.7% since January 2015 (the base period for the index).
The UK private rented sector price index is fractionally ahead of the two main economy-wide price indices, the CPI and the CPIH. This is the second consecutive month this has happened.
Though not shown here, the annual rate of change of the IPHRP was 1.4% in the year up until February 2019. The annual rate of growth is now fractionally lower for the private rental price index than either the CPI or the CPIH (both at 1.7%).
This chart shows the growth in real wages (allowing for inflation) against the growth in the IPHRP.
The index of real wages grew noticably between Feb 2018 and the summer of 2019. Since the autumn however the growth in real wages has stalled quite noticably.
The annual rate of real wage growth (not shown) does continue to be strong. In January real wage growth was 1.4% – ie 1.4% above the rate of inflation (CPI), Nevertheless, annual real wage growth in January 2020 ws lower than in 10 of the 12 months for 2019.
(It should be noted however wage data in particular can be subject to some fluctuation and figures are always subject to some adjustment)
[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, with slowly growing volumes of dwelling completions. Meanwhile, there is a decline in the proportion of dwelling completions intended for social housing.
In 2019 Q3, local authority dwelling completions was just 810 across the whole of England.
The pattern of dwelling completions in Wales also shows a combination of:
Low – and declining – volumes of house completions:
Low numbers of social housing completions:
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.