Transcript Changes to estimates of imputed Rental in Blue Book 2016

Changes to Imputed Rental in BB16
Outline
• What is imputed rental?
• BB15 position and brief history
• Outline of changes in BB16
What is imputed rental?
• “The output of services of owner-occupied
dwellings is valued at the estimated value of
rental that a tenant would pay for the same
accommodation...”
• Worth about 15% of HHFCE (France 14%,
Germany 10%)
• Slightly less than 10% of UK nominal GDP
What is imputed rental?
• Conceptually:
HHFCE for imputed rental = Output
Output – costs of production = GOS
• So though measured as an expenditure,
flows through output/income fairly simply
• However, also have second homes, rent free
dwellings and cross-border income...
BB15 position
• Measured using Living Costs and Food
survey combined with number of rooms from
Census/DCLG
• The implied deflator for this measure of
imputed rental shows strong growth
• BB14 changed CP estimates to show growth
in line with the CPIH after 2010
BB15 position
50000
Total imputed rental (COICOP 04.2)
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
CVM
CP
BB15 position
Implied deflator vs CPIH OOH
250
200
150
100
Implied deflator (LCF method)
50
0
CPIH (OOH)
BB16 changes
• Switching data source to the Valuation Office
Agency rental survey
• Similar data sources for Wales, Scotland and
Northern Ireland
• Sample size allows stratification using
dwelling type by region
• Creating a CP measure first, then deflating
using the CPIH
BB16 Stratification method
Terraced
Semi-det
Detached
Flat
Region 1
Price x Vol
Price x Vol
Price x Vol
Price x Vol
Tot per Reg
Region 2
Price x Vol
Price x Vol
Price x Vol
Price x Vol
Tot per Reg
...
Price x Vol
Price x Vol
Price x Vol
Price x Vol
Tot per Reg
Tot per DT
Tot per DT
Tot per DT
Tot per DT
CP figure!
Plus various other complications around vacants/2nd homes/quarterly path/backcasting etc...
BB16 changes – key messages
• Because we are changing both data and
method, changes could lead to both level
and/or path changes
• Likely to have larger impact on CP measure
than CVM (it is the price source we are
changing)
• Implied deflator will be naturally aligned to the
CPIH throughout the series
Any
questions?