The Office for National Statistics (ONS) House Price Index (HPI), previously published by the Department for Communities and Local Government (DCLG), is a monthly release that publishes figures for mix-adjusted average house prices and house price indices for the UK, its component countries and regions. The index is calculated using mortgage financed transactions that are collected via the Regulated Mortgage Survey by the Council of Mortgage Lenders. These cover the majority of mortgage lenders in the UK. The HPI complements other measures of inflation published by ONS such as the Consumer Price Indices, the Retail Prices Index, the Producer Price Indices and the Services Producer Price Indices.
This statistical bulletin provides comprehensive information on the change in house prices on a monthly and annual basis. It also includes analysis by country, region, type of buyer (first-time buyers and former owner-occupiers) and type of dwelling (new dwelling or pre-owned dwelling). Historical series for all accompanying tables that transferred from DCLG are also available in the data section of this release.
The figures published in this release are not seasonally adjusted unless otherwise stated.
UK average house prices increased by 2.2% over the year to January 2013, down from an increase of 3.3% in the year to December 2012. The average UK mix-adjusted house price in January 2013 was £234,000.
Figure 2 below shows the UK mix-adjusted House Price Index. Price levels are now at similar levels to mid-2008 prices but remain below the peak of January 2008.
On a seasonally adjusted basis, average house prices fell by 0.7% over the month to January 2013 compared with an increase in average prices of 0.4% in January 2012.
|House Price Index: UK All Dwellings|
|Index||% 12 month change||Index||% monthly change||£|
|Not seasonally adjusted||Not seasonally adjusted||Seasonally adjusted||Seasonally adjusted||Not seasonally adjusted|
During the year to January 2013, average house prices increased in England by 2.4% and in Wales by 0.9%. However, prices decreased by 0.2% in Scotland and by 5.4% in Northern Ireland, where house prices have been falling since February 2008.
Average house prices increased in all of the nine English regions over the year to January 2013. The largest increase was London (5.5%), followed by the East (3.0%) and the North East (2.2%).
Average mix-adjusted house prices in January 2013 stood at £243,000 in England, £154,000 in Wales, £130,000 in Northern Ireland and £179,000 in Scotland.
In January 2013, London continues to be the English region with the highest average house price at £403,000. The North East had the lowest average house price at £146,000. London, the South East and the East of England all had prices higher than the UK average price of £234,000.
Excluding London and the South East, the average UK mix-adjusted house price was £187,000.
The average price for properties bought by first-time buyers increased by 2.0% over the year to January 2013, down from an increase of 2.7% in December 2012. During January 2013 the average price paid for a house by a first-time buyer was £175,000.
The average price for properties bought by former owner-occupiers (existing owners) increased by 2.2% in the year to January 2013, compared with an increase of 3.5% in December 2012. In January 2013, the average price paid for a house by a former owner-occupier was £269,000.
During the year to January 2013 prices paid for new dwellings increased by 0.2% on average, compared with an increase of 4.0% in the year to December 2012. The average UK house price for new dwellings in January 2013 was £223,000.
During the year to January 2013 prices paid for pre-owned dwellings increased by 2.3% on average, compared with an increase of 3.2% in the year to December 2012. The average UK house price for pre-owned dwellings in January 2013 was £235,000.
ONS HPI monthly and quarterly reference tables (number 1 to 19). (3.22 Mb Excel sheet) This reference table provides full historical series for the monthly tables accompanying the House Price Index statistical bulletin. This month, tables 1 to 9 have been updated with the latest monthly data for January 2013. The seasonally adjusted figures for the last 12 months in Table 7 have also been revised this month as scheduled. This reference table also contains all the quarterly live tables transferred to ONS from DCLG. No updates have been made to the quarterly tables this month. Please note that during the transfer ONS renumbered the live tables. Full details of the new table numbers and their corresponding DCLG table numbers can be found in the 'contents' page of the reference table.
ONS HPI annual tables (number 20 to 39). (1.15 Mb Excel sheet) This reference table contains all the annual live tables transferred to ONS from DCLG. This month, tables 22, 23, 24, 25, 26, 27, 28, 31, 32, 33 & 34 have been updated with the latest annual data for 2012. The remaining tables will be updated in July 2013.
New this month
Transfer of HPI from DCLG to ONS
Following the announcement by the National Statistician on the 9 December 2011, the House Price Index (HPI) has now been transferred from the Department for Communities and Local Government (DCLG) to the Office for National Statistics (ONS). From the February 2012 publication onwards, ONS took responsibility for the publication of the HPI statistical bulletin and a number of supporting tables.
The tables transferred were A1–A7, 502–508, 511–517, 521, 523, 534–540, 557, 571, 572, 590–594. DCLG will continue to produce and publish the remaining housing market live tables (tables 580–588) including those on housing affordability based on Land Registry data.
Note that during the transfer of HPI from DCLG to ONS, the tables that ONS took responsibility for have been renumbered. The content of these tables remains the same. All of these tables can be accessed via the two reference tables in the data section of this release. There is one reference table for the monthly and quarterly tables (3.22 Mb Excel sheet) and another reference table for the annual tables. (1.15 Mb Excel sheet) These tables also include a look up table so users can cross reference the old DCLG table numbers with the new ONS numbering scheme.
Revisions this month
There are small revisions to the seasonally adjusted series for the last 12 months, which are expected from the monthly seasonal adjustment process.
Revisions expected next month
New mix-adjustment index weights for 2013 will be implemented in the next release as scheduled. This update of the weights will revise the January 2013 mix-adjusted prices. For further details on the annual update of weights, please see the 're-weighting' section below.
In December 2010, the National Statistician published a review of UK house price statistics. The review report recommended that the producers of official housing market statistics should work together to produce a regular combined statistical release containing the main official measures of house prices and consider the development of a definitive official measure.
Since the successful transfer of the house price index to ONS in March 2012, initial discussions have taken place between the main producers of official house price statistics to identify what work is required to take forward the recommendations of the review. The departments involved in these discussions are Land Registry for England and Wales, Registers of Scotland, Northern Ireland Department of Finance and Personnel and the Office for National Statistics.
It has been agreed that ONS will take the lead in the development of its House Price Index (HPI) to become the National Statistic for house prices. This lead house price index will be the measure that best meets the majority of the criteria laid out in the review report. The remaining official house price indices, which are likely to be timelier than the National Statistic, will continue to be published in their current format. Work will be carried out to better explain how these indices will sit alongside the National Statistic and provide fuller commentary that brings together each official measure.
During 2012, development focused on investigating potential options for improving the coverage of the ONS HPI to include those houses purchased without a mortgage (cash sales). A suitable methodology will continue to be investigated so that the index can be updated to include cash sales in 2013. Any potential change to the ONS HPI as a result of this work will be pre-announced and subjected to an appropriate user consultation as laid out in the Code of Practice for Official Statistics.
Additionally, ONS will be publishing an article later this month that fully documents the methodology and data sources used to produce the ONS HPI and better explains the benefits in having specific indices (for England and Wales, Scotland, and Northern Ireland) as well as a National Statistic.
Relevance of the ONS House Price Index
The ONS HPI is an important measure of house price inflation for the UK and together with the Land Registry HPI, it is one of the main house price indices used by central and local government to support decision making in the UK. Other users include private individuals, surveyors and analysts in financial institutions.
The ONS HPI is also an important input into the housing cost component of the Retail Prices Index (RPI). Each month a customised HPI delivery is produced using a sub-sample of the full data set for use in the RPI.
At the end of every quarter, as well as releasing final figures for the latest month, ONS revises the figures from the previous two months. This is done because some mortgage lenders, which account for 1 to 2% of all records, provide their data on a quarterly rather than monthly basis. Additionally, data will be revised for the previous month if more than 1,000 additional cases are received in a subsequent month.
In July 2012 the methodology used to seasonally adjust the HPI was updated following a review and brings the HPI in line with ONS best practice for seasonal adjustment. Seasonal factors are now estimated on a monthly basis and therefore may result in small revisions to the previous 12 months data. This updated process improves the accuracy of the seasonally adjusted figures.
Other revisions to historical data (other than those currently due for revision) will be made only if the revision is substantial.
In all cases, the revised figures are labeled with a 'R' and the reason for the revision explained under the 'New this month' section of the background notes.
Since October 2005 the ONS HPI (formerly the DCLG HPI) has been based on a sample of mortgage completions data from the Regulated Mortgage Survey (RMS) as collected by the Council of Mortgage Lenders (CML).
The number of transactions received from the RMS is affected by the total number of mortgages completed for house purchase in any period. During 2011 the sample covered 65-70% of all UK mortgage completions.
The ONS HPI is mix-adjusted to allow for differences between houses sold (for example type, number of rooms, location) in different months within a year. House prices are modelled using a combination of characteristics to produce a model containing around 100,000 cells (one such cell could be first-time buyer, old dwelling, one bedroom flat purchased in London). Each month estimated prices for all cells are produced by the model and then combined with their appropriate weight to produce mix-adjusted average prices. The index values are based on growth rates in the mix-adjusted average house prices and are annually chain linked. More information on the model used is available via the hedonic model methodology paper (246.4 Kb Pdf) published on the HPI User Guidance webpage.
The ONS HPI is a weighted Laspeyres-type index. In January of each year the index weights are updated based on the relative numbers of transactions during the previous three years, which are grossed to total transactions obtained from Land Registry. Applying new weights ensures that the index keeps up to date with changes in the types of properties that are being purchased, and therefore reflects the price of the average property.
One consequence of changing the weights every year is that the mix-adjusted house prices cannot be compared between years as the weights are different. The index itself is constructed on a chain-linked basis, which enables year-on-year comparisons to be made. This means that the year-on-year change in the index for June 2011, say, is effectively the change in the average price from June to December 2010 (using the weights for 2010) combined with the change in the average price from January to June 2011 using the weights for 2011. Therefore, the year-on-year change in the index is not the same as the year-on-year change in the mix-adjusted average price. More information on the HPI methodology is available on the DCLG Website.
The housing market shows seasonal effects that affect house prices. For example, prices have tended to be higher during the summer months than during the winter months. These seasonal effects are estimated and adjusted for in order to calculate month-on-month price changes. Seasonally adjusted figures are provided at a national level in Table 7 alongside the non-seasonally adjusted figures of the other tables. Seasonal adjustment is performed each month and reviewed each year, using the standard and widely used software X-12-ARIMA. Seasonally adjusted house price estimates are used to report monthly percentage changes. All other figures such as annual rates of change and average house prices are based on non-seasonally adjusted estimates, unless otherwise stated.
Other house price statistics
Currently there are a number of different sources of house price statistics published in addition to the ONS HPI. There will be differences in the data published by each source as there are differences in both the data and methodology used. Therefore the ONS HPI is not directly comparable with these other indicators.
Land Registry House Price Index
All residential property transactions in England and Wales are recorded by Land Registry. These transactions are used for calculating the Land Registry index. This index is based on repeat-sales regression, which calculates the change in price of any property transacted twice since 1995. Therefore new build properties are excluded from the index. Land Registry publishes indices at a sub-regional level. The Land Registry HPI is normally published on the 20th working day of every month, and refers to all transactions of the preceding month.
The Land Registry HPI can be accessed via the Land Registry's website.
Registers of Scotland House Price Index
Registers of Scotland records all the property transactions in Scotland. It produces average house prices based on arithmetic means of these transactions, which is published as the Registers of Scotland House Price Index in the second month after the month to which the figures refer to.
Northern Ireland Residential Property Price Index
The Land & Property Services assisted by the Northern Ireland Statistics & Research Agency (NISRA) publish a quarterly Residential Property Prices Index (RPPI) for Northern Ireland. The index measures change in the price of residential property sales recorded by Her Majesty's Revenue & Customs. This is a new official statistic, first published in quarter 1 of 2012.
Halifax House Price Index and Nationwide House Price Index
Both Halifax and Nationwide produce house price indices based on their own mortgage approvals only and therefore, like the ONS HPI, will not include any cash transactions. They both have UK-wide coverage, and since the Halifax and Nationwide use only their own in-house data they can process them immediately and do not have to await the receipt of data from other lenders. This means that they are more timely than the ONS HPI.
LSL Property Services/Acadametrics House Price Index
The LSL Property Services/Acadametrics HPI is the only house price index to reflect all transactions, as opposed to data samples, and provides mix and seasonally adjusted results at national, regional and county/unitary district/London borough levels.
The index can be accessed at Acadametrics.
In addition, other indices are also produced. Rightmove tracks the asking prices of properties in its website and the Royal Institute of Chartered Surveyors (RICS) produces an opinion survey of its surveyors regarding the direction that prices are moving in.
Full details on the alternative house price statistics can be accessed via the National Statistician's Review of House Price Statistics.
This bulletin includes the January 2013 data. Future publication dates for this statistical bulletin are available via the Publication Hub.
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|Christopher Jenkins||+44 (0)1633 455474||Office for National Statisticsemail@example.com|