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Office of National Statistics (ONS) Index of Private Housing Rental Prices (IPHRP)

Summary

The Office of National Statistics (ONS) is the largest producer of official data in the UK, and produced its first private rental price index in June 2013. The index, called the Index of Private Housing Rental Prices (IPHRP), focuses on long-term trends in rental prices and is published quarterly. It aims at measuring rents paid for all the private rented dwelling stock (for both existing agreed rents and new rents); it is not designed to measure the average price of new rental contracts agreed on the market. The ONS also produces Private Rental market statistics, using Valuation Office Agency data, and a monthly house sales index.

Data

Unlike the ONS's monthly House Sales Index, this rental index has no average prices and instead focuses on rising and falling trends in rental prices, shown as a percentage. This is available UK wide (except Northern Ireland), and separately for England, Scotland and Wales as well as for nine English regions.

The percentage change over the last 12 months is a key piece of data published. The IRHRP has access to agreed rental price data for England and its regions dating back to January 2005, for Wales dating back to January 2009 and for Scotland back to January 2011. This enables the IPHRP to show longer term changes in rental prices.

Method

The IRHRP is calculated using expenditure weights and rental indices. The expenditure weights are updated yearly and reflect the expenditure on rented private housing regionally and UK wide (except Northern Ireland). To compute weights, the total count of private rental dwellings is used from published housing stock statistics, such as the English Housing Survey and the Scottish House Condition Survey. (Note: this is the same approach used for the Move With Us Rental Index in its estimation of weights). The rental indices are calculated monthly, are relative to January 2011 and are broken down by region and property type, such as flat or semi-detached house as well as whether properties are furnished or unfurnished. A sample of private rented properties is used to compute the index. Collected rental prices are assumed to be valid for 18 months. To keep the sample homogeneous, a matching approach is adopted: if no rental price is available for a property in the sample, the property is replaced by another dwelling of comparable quality.

The sources for rental price indices and expenditure weights are the ONS's Private Rental market statistics, which uses Valuation Office Agency (VOA) data, and rental prices surveys published by the Scottish and Welsh governments. Private rental data from the Ministry of Housing, Communities and Local Government (DCLG) is also used to calculate expenditure weights. More detailed information about the methodology is available here.

Advantages

  • The VOA and Scottish and Welsh government data is well respected and covers a large sample size totalling 521,000.
  • As the largest supplier of official statistics in the UK the ONS has added credibility in the way it compiles figures.

Disadvantages

  • By only showing percentage change in rental prices the data is limited.
  • Its quarterly publication makes the figures out of date
  • Without Northern Ireland's figures it gives an incomplete picture of UK rental prices.

Verdict

The use of well respected and thorough sources of government data to calculate trends in rental prices make this an interesting addition to the range of rental price indices on offer. However, without any rental prices and only a quarterly publication, its data offers a limited picture of the UK rental market.

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