Measuring rental price inflation from tenancy bond data is working well, Stats NZ said today.
The consumers price index (CPI) for the June 2019 quarter (to be released on 16 July) will be the first in the world to use administrative rent data in this way to construct the CPI.
The new method for measuring rent prices arose from a collaboration with Ministry of Business, Innovation and Employment (MBIE).
“Thanks to this work, landlords no longer have to fill in a Stats NZ survey every quarter,” consumer prices manager Gael Price said.
Instead, rents are measured directly from data that MBIE is already collecting.
MBIE holds tenancy bonds on behalf of landlords, which means the agency has information on actual rents charged for all tenancies. This is a much bigger source of data than the survey that was previously used to measure rental prices.
The new approach means Stats NZ can release rental price indexes (RPI) every month. This is because MBIE collects the data regularly as part of administering rental bonds. The RPI has been available monthly since the start of 2019.
Rent is the largest single item in the CPI, with a weight of 9 percent.
“The shift to a monthly rental price measure is useful for forecasters. They’ll be able to use the RPI to forecast the rent component of quarterly CPI inflation,” Ms Price said.
“We’re very pleased to be collaborating with MBIE on this. Without MBIE’s data, we wouldn’t be able to realise the benefits of the RPI – a higher quality, more frequent release that’s valuable for forecasting.”
Stats NZ ran the rental survey for the last time in the March 2019 quarter. Data from that survey will be used in the March 2019 quarter CPI (to be released on 17 April).
Rental bond data available on MBIE’s website has more information about the activity level in the housing rental market.
“The two data sources are measuring two different things,” Ms Price said. “On MBIE’s website you can see rental bond data, which tells you all about the new rentals taken out each month. That includes how many new rentals there were, what the rent was on each one, and a regional breakdown too.”
The Stats NZ RPI differ from MBIE data because RPI are designed to measure ‘pure price’ inflation, consistent with the concepts used for the CPI. This means controlling for changes in the quality of rental properties over time, such as size and location.
New methodology for rental prices in the CPI has more information.
See Rental price indexes: March 2019 video.