Definition of housing rent index
A measure of the level of rents for dwellings in a geographic area over time.
Like house price indices, they are more accurate when they are quality-adjusted and encompass large, representative samples. Good quality rent indices are rare, because generally far less effort is put into calibrating them than house price ones.
Rents for properties on the market may differ significantly from those for existing tenancies because of such factors as rent-adjustment lags, long versus short-term tenancies and rent regulations. Rent measures used in consumer price indices are further influenced by the existence of ‘affordable’, below-market rent properties and social housing, particularly in Europe.
Comparisons of rents and house price indices may easily to lead to wrong conclusions, because house prices refer to recently traded properties; whereas rent indices may refer to a mishmash of market, regulated and social rents.