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The Move With Us Rental Index

Glossary Glossary Table of Contents LSL Buy to Let Index LSL Buy to Let Index

Summary

The new The Move with Us rental index was launched in October 2012. The data is based on the Home.co.uk dataset of properties available for rental, which contains around 300,000 observations at each point in time. A rigorous statistical approach, provided by Home.co.uk, based on mix-adjustment and the exclusion of outliers ensures that the index is an accurate representation of the UK private rental market. The index is constructed for a general audience and aims at becoming the reference point for information on rental market trends.

Data

Figures published in the The Move with Us rental index include an average weekly asking rent, for England, Wales, and Scotland, as well as for each single region of England. Indices for the different kinds of units - houses and flats grouped by number of bedrooms - are also published. Moreover, Home.co.uk computes a monthly moving average to show real medium-term changes in the index and eliminate short-term noise. Statistics on average time on the market are also shown, providing current and potential landlords with a useful instrument to understand market conditions.

Method

This index is based on weekly data snapshots of properties advertised for rent as found by the Home.co.uk Property Search Engine and computed with a mix-adjustment method. The average rent is calculated for properties with similar characteristics and location, and the different averages are combined using weights. More precisely, units are divided into 99 cells according to location and physical characteristics - e.g. 2-bedroom flats in South East England, detached houses in Wales. Properties that have been on the market for more than 20 weeks are excluded. Units with asking rents in the top or bottom 1% of their cell range are also left out from index computations. Cell weights are estimated using the composition of the private rented housing in official surveys - the 2010 English Housing Survey, the 2009 Scotland House Condition Survey, and the 2008 Living in Wales Survey.

Advantages

  • The index benefits from what is probably the largest dataset of advertised properties.
  • With its weekly frequency, it is amongst the most up-to-date measures of the rental market.
  • It accounts for rent reductions whilst properties are still on the market, but at the same time it excludes properties that have been on the market for too long.
  • The mix-adjustment procedure uses official Government surveys to estimate the composition of the UK private rented housing stock.

Disadvantages

  • Data are based on asking prices rather than actual rents. Hence, information should be used as an indicator of how the property market is likely to perform over the coming weeks.
  • The index is not seasonally adjusted.

Verdict

The Move with Us rental index is a welcome addition to the various UK rent indices. It draws upon a large dataset of advertised rents. Moreover, it is based on a solid economic and statistical methodology and devotes necessary attention to important aspects of private renting, such as the time on the market of properties. The Move with Us rental index provides both prospective renters and landlords with a clear idea of where the UK private rental market is going.

Glossary Glossary Table of Contents LSL Buy to Let Index LSL Buy to Let Index

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