The Twittersphere became intresting on Friday with news that the office of national statistics had released the private rental index data showing that UK rents had increased by JUST 1.7% in the last year.
This of course was jumped upon by the PRS as an example of reality, while the rest of us where left scratching our heads at that figure, it simply didn’t bear out against the realities we see every day.
Well it turns out that the numbers in the data where WRONG. The ONS admitted later on Friday that in fact the percentage was closer to the 2.1% estimate and possibly even at twice the official recorded rate.
While a lot of property and lettings sites where keen to list the modest 1.7% number in their news pages, no-one but the FT & nicosiamoneynews.com seemed to carry news of the correction. That’s why we’re recording it here, anybody who’s quoting a rent rise figure of 1.7% is wrong. As the title of this post suggests quoting that number is “lies, damned Lies, and statistics”
We can expect new figures in March but in the meantime more information can be found at the Financial Times (if you subscribe) or below…
The Office for National Statistics admitted on Friday that it had badly underestimated the increase of costs of private renting in its inflation statistics and that prices had risen at roughly twice the officially recorded rate.
With private renting only a small part of households’ overall spending, the errors would not have had a large effect on overall inflation. But they did severely distort the CPIH measure of consumer price inflation, which includes owner occupiers’ #housing costs and which statisticians want to become the headline rate.
In early 2013, the ONS decided to revamp the collection and measurement of private rents, using a Valuation Office Agency database, but the inflation figures were soon challenged. After initially resisting a review, the increasing disparity between ONS data on private rents and those collected elsewhere forced the issue, and the ONS found analytical errors in the way it had been analysing VOA data.
The main problems arose where rents were not collected for a property on a regular basis. The statistics agency either assumed they were unchanged for 18 months or rejected the data completely, rather than substituting rent changes in similar properties.