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 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 3.3% over the year to July 2013, up from an increase of 3.1% in the year to June 2013. This increase follows the moderate house price increases the UK has experienced since April 2012 (figure 1). The average UK mix-adjusted house price in July 2013 was £245,000.
Figure 2 shows the UK mix-adjusted House Price Index, which in July 2013 reached 185.0. This means that price levels are now slightly below the peak of January 2008 when the index reached 185.5.
On a seasonally adjusted basis, average house prices increased by 0.3% between June and July 2013 compared with no change in average prices during the same period in 2012.
|House Price Index: UK All Dwellings|
|Index||% 12 month change||Index||% monthly change||£|
This month the seasonally adjusted figures have been revised from the beginning of the series. This follows the annual review of the HPI seasonal adjustment which was carried out this month.
During the year to July 2013, average house prices increased by 3.7% in England and by 1.8% in Northern Ireland, then were offset by decreases of 2.0% in Scotland and 0.7% in Wales.
England is the only UK country where property prices are now higher than at their previous peak. The index for England reached 182.4 in July 2013. This is 0.9% higher than the previous peak of 180.8 in January 2008. The index for Northern Ireland (143.5) is 49.0% below the peak of August 2007 (281.5). The index for Scotland (215.4) is 6.6% below the peak of June 2008 (230.6). The index for Wales (204.8) is 7.8% below the peak of January 2008 (222.1).
Average house prices increased in seven of the nine English regions over the year to July 2013 (figure 4). The largest increase was London (9.7%), followed by the South East (2.6%) and the East Midlands (2.4%). Prices fell by 1.3% in the North East and by 0.7% in the North West.
The indices for two out of the nine English regions are higher now than at their previous peak. The index for London (204.7) is 17.3% higher than the peak in January 2008 (174.5). The South East is also 0.7% above the peak of January 2008 (166.5) with an index of 167.7 in July 2013. The East of England and the South West are close to their previous peaks, being 0.8% and 4.8% below them respectively.
Average mix-adjusted house prices in July 2013 stood at £255,000 in England, £160,000 in Wales, £132,000 in Northern Ireland and £182,000 in Scotland.
In July 2013, London continues to be the English region with the highest average house price at £438,000. The North East had the lowest average house price at £144,000. London, the South East and the East of England all had prices higher than the UK average price of £245,000.
Excluding London and the South East, the average UK mix-adjusted house price was £192,000.
The average price for properties bought by first-time buyers increased by 4.0% over the year to July 2013, up from an increase of 3.9% in June 2013. During July 2013 the average price paid for a house by a first-time buyer was £183,000.
The average price for properties bought by former owner-occupiers (existing owners) increased by 3.0% in the year to July 2013, up from an increase of 2.7% in June 2013. In July 2013, the average price paid for a house by a former owner-occupier was £282,000.
During the year to July 2013 prices paid for new dwellings did not change on average, compared with an increase of 3.4% in the year to June 2013. The average UK house price for new dwellings in July 2013 was £221,000.
During the year to July 2013 prices paid for pre-owned dwellings increased by 3.5% on average, compared with an increase of 3.1% in the year to June 2013. The average UK house price for pre-owned dwellings in July 2013 was £247,000.
ONS HPI monthly and quarterly reference tables (3.32 Mb Excel sheet) (number 1 to 19). 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 July 2013. Following the annual review of the HPI seasonal adjustment process, the seasonally adjusted figures in Table 7 have been revised. The revisions affect the entire series to their beginning in February 2002. Following the latest review the new dwellings series has been identified as being seasonal and therefore is now seasonally adjusted. This reference table also contains all the quarterly live tables transferred to ONS from DCLG. 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 (1.16 Mb Excel sheet) (number 20 to 39). This reference table contains all the annual live tables transferred to ONS from DCLG. No annual tables have been updated this month. The next scheduled update of this table is March 2014.
New this month
New house price data for July 2013 are published this month. The monthly and quarterly reference table (3.32 Mb Excel sheet) has been updated to include data for July 2013.
Revisions this month
There are small revisions to all the seasonally adjusted series from the beginning of these series in February 2002. These revisions are implemented once a year following the seasonal adjustment review of the ONS HPI and ensure higher accuracy of all the seasonally adjusted series. This review identified seasonality in the new dwellings index, and therefore this series will be published seasonally adjusted from now onwards.
Revisions next month
No revisions are expected for the August 2013 HPI, apart from the normal revisions to the latest 12 months that follow the monthly seasonal adjustment process.
Taking forward the recommendations from the National Statistician’s review of UK house price statistics
Following the publication of the National Statistician's review of house price statistics in 2010, the current producers of official house price statistics have been in consultation regarding how best to take forward the review recommendations.
Following initial discussions, it was agreed that the current ONS HPI would be developed to become the measure that best meets the user requirements laid out in the 2010 review, mainly by expanding the coverage of the index to include cash sales data. The inclusion of cash sales would be carried out by using Land Registry data to supplement the current ONS dataset.
Analysis has shown that this proposed development would not meet the recommendations laid out in the review, namely the development of a joint, single definitive UK house price index as, under this approach, each of the current departments would continue to produce their own indices in their current format potentially leading to confusion for users.
Therefore, following agreement across the four producers of official house price statistics, a joint project will be initiated to consider the development of a single definitive UK House Price Index from which official providers can report on their own areas of responsibility in a way that can be directly compared. This collaborative approach would allow the publishing of consistent HPI data at a national, regional and sub-regional level across the UK.
The first stage of this development is to consider how the current data sources and methodologies can be used to produce a single, definitive HPI that meets user requirements. It is expected that this initial analysis will be completed by the end of 2013 at which time a more substantial note on the plans, methods and timetable for the implementation of the index will be published. This note was first published in the May 2013 HPI.
Index of Private Housing Rental Prices
On 26 June 2013 ONS published the Index of Private Housing Rental Prices (IPHRP). IPHRP is an experimental series that measures the changes in price charged for renting private housing in Great Britain. The index is calculated from rental prices collected by Valuation Office Agency, Scottish Government and Welsh Government, and includes price indices at country level and English region level. The next publication of the IPHRP is scheduled for 25 September 2013.
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 RPIJ and RPI retail price indices. Each month a customised HPI delivery is produced using a sub-sample of the full data set for use in RPIJ and 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. Further details on the differences between official house price statistics can be found in the article Official House Price Statistics Explained.
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 July 2013 data. Future publication dates for this statistical bulletin are available via the Publication Hub.
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