Private rental prices paid by tenants in Great Britain rose by 2.4% in the 12 months to July 2016, unchanged compared with the year to June 2016.
Private rental prices grew by 2.6% in England, 0.2% in Scotland and were unchanged in Wales (0.0%) in the 12 months to July 2016.
Rental prices increased in all the English regions over the year to July 2016, with rental prices increasing the most in the South East (3.5%).Nôl i'r tabl cynnwys
The Index of Private Housing Rental Prices (IPHRP) measures the change in price of renting residential property from private landlords. The index is published as a series of price indices covering Great Britain, its constituent countries and the English regions.
IPHRP measures the changes in price tenants face when renting residential property from private landlords, thereby allowing a comparison between the prices tenants are charged in the current month and the same month in the previous year. The index does not measure the change in newly advertised rental prices only, but reflects price changes for all private rental properties.
IPHRP is released as an Experimental Statistic. This is a new official statistic undergoing evaluation and therefore it is recommended that caution is exercised when drawing conclusions from the published data, as the index is likely to be further developed. Once the methodology is tested and assessed, and the publication meets user needs, the IPHRP will be assessed against the Code of Practice for Official Statistics to achieve National Statistic status. A description of the methodology and the sources used is included in the article Index of Private Housing Rental Prices, Historical Series. Further details regarding improvements to the IPHRP price collection methodology can be found in the January 2015 article.
The IPHRP is constructed using administrative data. That is, the index makes use of data that are already collected for other purposes in order to estimate rental prices. The sources of private rental prices are Valuation Office Agency (VOA), Scottish government (SG) and Welsh government (WG). All 3 organisations deploy rental officers to collect the price paid for privately rented properties. The sources of expenditure weights are Department for Communities and Local Government (DCLG), Scottish government, Welsh government and VOA.
DCLG produces estimates of the private rental dwelling stock for England and its regions. Scottish government and Welsh government produce estimates of private rental dwelling stock for Scotland and Wales respectively.
Great Britain rental prices
The Great Britain private rental price series starts in January 2011. This is the date for which all the sources for constituting countries are available on a consistent basis. This index has seen small and gradual increases since January 2011 (Figure 1).
Between July 2015 and July 2016, private rental prices grew by 2.4% in Great Britain. For example, a property that was rented for £500 a month in July 2015, which saw its rent increase by the average rate in Great Britain, would be rented for £512.00 in July 2016. Rental prices excluding London grew by 2.1% in the same period (Figure 2).
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All the countries that constitute Great Britain have experienced rises in their private rental prices since 2011 (Figure 3). Since January 2011, rental prices in England have increased more than those of Wales and Scotland.
The annual rate of change in the IPHRP for Wales (0.0%) continues to be well below that of England and the average for Great Britain (Figure 4). Rental growth in Scotland has gradually slowed to 0.2% in the year to July 2016, from a high of 2.1% in the year to June 2015.
Between July 2015 and July 2016, rental prices grew by 2.6% in England, 0.2% in Scotland and were unchanged in Wales (0.0%) (Figure 5).
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The Index of Private Housing Rental Prices (IPHRP) series for England starts in 2005. Private rental prices in England show 3 distinct periods: rental price increases from January 2005 until February 2009, rental price decreases from July 2009 to February 2010, and increasing rental prices from June 2010 onwards (Figure 6). When London is excluded, England shows a similar pattern but with slower rental price increases from around the end of 2010.
Figure 7 shows the historical 12-month percentage growth rate in the rental prices of each of the English regions.
Since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3.0% year-on-year, with July 2016 rental prices being 2.6% higher than July 2015 rental prices (Figure 8). Excluding London, England showed an increase of 2.3% for the same period.
In the 12 months to July 2016, private rental prices increased in each of the 9 English regions (Figure 9). The largest annual rental price increases were in the South East (3.5%), up from 3.4% in June 2016, followed by the East of England (3.1%) and London (3.0%), both unchanged from June 2016. Annual rental growth in the South East has surpassed that of London since May 2016.
The lowest annual rental price increases were in the North East (0.9%), up from 0.8% in June 2016, the North West (1.2%) and Yorkshire and The Humber (1.3%), both unchanged when compared with June 2016.
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The rental market in Great Britain continued to show signs of strength in the year to July 2016, as prices grew by 2.4%, unchanged compared with June 2016. Rental price inflation was stronger in the South East (3.5%), the East of England (3.1%), London (3.0%) and the East Midlands (2.5%), while it was far weaker in regions such as Scotland (0.2%) and the North East (0.9%). In Wales, rental prices were flat (0.0%) in the year to July 2016.
Looking at data from the UK House Price Index over a longer period shows residential house price growth has typically been stronger than rental price growth for a number of years, with an average 12-month rate of house price inflation between January 2013 and June 2016 of 6.0%, compared with 2.1% for rental prices.
Inflation in the rental market is likely to have been caused by demand in the market outpacing supply. The Royal Institute of Chartered Surveyors (RICS) Residential Market Survey reported an increase in demand in the 3 months to July, while tenant demand increased in June according to the Association of Residential Letting Agents (ARLA). On the supply side, RICS reported that new landlord instructions were flat in July and ARLA reported that the supply of rental stock bounced back in June 2016, following a sharp drop in May.
Broader economic indicators suggest that the economy has continued to grow relatively strongly over recent periods, with output increasing by 0.6% in Quarter 2 (Apr to June) 2016, faster than the 0.4% growth recorded in the first quarter of 2016.
Labour market conditions have remained robust in recent months, with employment at a record high and unemployment at 4.9%, the lowest rate since before the economic downturn. These improvements, along with falls in the inactivity rate over the last 12 months, suggest confidence in labour market outcomes remains high.
Regular pay also grew by 2.3% in the 3 months to June 2016 compared with the same period last year – continuing a revival of real earnings growth. However, rental prices have been growing at a slightly faster rate than real wages in recent months.Nôl i'r tabl cynnwys
IPHRP is classified as an Experimental Statistic to allow for evaluation of the output against user needs. As part of the ongoing development, we are considering how to improve IPHRP ahead of potential assessment as a National Statistic.
One of the main user requirements was for IPHRP to be published monthly. In response to this requirement, from February 2016, this publication changed from a quarterly to a monthly release. The next monthly publication will be 29 September 2016.
In September 2015, we published an evaluation of our rental price indices against the growth in average private rental prices published by VOA; please see the article Explaining private rental growth. We are looking to update the series presented within this article to be published alongside the next monthly publication on 29 September 2016.
In addition to government sources, a number of private companies such as Countrywide, Homelet and LSL Property Services produce statistics on the private rental market. These are predominantly flow measures of private rents, whereas IPHRP is a stock measure. A comparison of these against IPHRP can be found within Tables 3 and 4 of the IPHRP dataset.
For further details, please contact firstname.lastname@example.orgNôl i'r tabl cynnwys
We welcome your views on the data presented in this statistical bulletin. Please contact the Housing Market Indices team using the contact details accompanying this release to discuss any aspect of the data, including your views on how we can improve the data.Nôl i'r tabl cynnwys
The IPHRP dataset provides full historical series for the tables accompanying the IPHRP statistical bulletin. This month, the tables have been updated with the latest monthly estimates for July 2016.
The IPHRP weights summary provides aggregated weights for indicative purposes only. The IPHRP weights are updated annually in February of each year.Nôl i'r tabl cynnwys
Details of the methodology used to calculate the IPHRP can be found in the July 2013 IPHRP article but this it requires some updating. This article can be supplemented by the January 2015 article which presents some recent methodological changes for IPHRP.
The IPHRP Quality and Methodology Information document contains important information on:
- the strengths and limitations of the data
- the quality of the output: including the accuracy of the data and how it compares with related data
- uses and users
- how the output was created
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