The ONS has released a new statistical measure, the Index of Private Housing Rental Prices. Wait, don’t go! Because it’s actually fascinating; if it’s right, it overturns a lot of conventional wisdom about housing.
The index shows that, since Jan 2012 (when the data begins), inflation in private housing retail prices has been lower than CPI inflation:
Change in indexes over a 12 month period.
That goes against conventional wisdom, which is that renting is getting more expensive at an astonishing rate. It also goes against another ONS dataset. CPI – the senior of the two measures of inflation – contains a series estimating the increase in prices of “actual rentals for housing”. That has been increasing above inflation for most of the last year:
Change in indexes over a 12 month period.
The reason for the discrepancy, according to the ONS, is that important word “private”. Private rental housing makes up just 57 per cent of the total rented accommodation in Britain: the rest is a mixture of local authorities, registered social landlords and housing associations. (5 per cent of the housing stock is actually classified as “UK holiday self-catering”, as well.)
If you consider all rentals, apparently the two indices would be largely identical (although methodological differences would still change the final numbers).
The release also provides a version disaggregated by region. That lets us see that while London is, unsurprisingly, inflating fastest, even in the capital inflation is still rising faster still.
This data release ought to overturn conventional wisdom – or at least help it be applied more specifically. The social housing sector, as a whole, is getting more expensive faster than inflation. Private rental housing is not. It may still be the case that certain types of private rental housing are, but that calls for a targeted intervention, not for the problem to be treated with blanket policies.
Update, 08:24 28/06/13:
At the request of Claire Strickett, here’s the IPHRP charted against annual change in total pay.
That makes the rent rises look more painful, to be sure; but still less bad than conventional wisdom would have it.
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