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 10.2% over the year to June 2014, down from an increase of 10.4% in the year to May 2014. This follows the moderate house price increases the UK has experienced since April 2012 (Figure 1) and is driven in large part by increases in London. The average UK mix-adjusted house price in June 2014 was £265,000.
In June 2014, the UK mix-adjusted House Price Index reached a record level of 201.2 (Figure 2). This is 1.2% higher than May 2014, when the index reached 198.9 and 8.5% higher than the pre-financial crisis peak of 185.5 in January 2008.
On a seasonally adjusted basis, average house prices increased by 0.5% between May and June 2014, the same as the increase in average prices during the same period a year earlier.
|House Price Index: UK All Dwellings|
|Index||% 12 month change||Index||% monthly change||£|
Average house prices are not comparable between years as they reflect a different mix of houses being transacted. Indices have been chain linked so they are comparable year-on-year. For more information please see the re-weighting section in the background notes.
SA = Seasonally adjusted.
During the year to June 2014, average house prices increased 10.7% in England, 3.5% in Wales, 6.0% in Scotland and 4.9% in Northern Ireland (Figure 3).
England is the only UK country where property prices are now higher than the pre-financial crisis peak of January 2008 (Figure 4).
The England index reached 198.8 in June 2014. This is 10.0% higher than the peak in January 2008 of 180.8. The index for Northern Ireland (148.1) in June 2014 is 47.4% below the peak of August 2007 (281.5). The index for Scotland (227.0) in June 2014 is 1.6% below the peak of June 2008 (230.6). The index for Wales (215.1) in June 2014 is 3.2% below the peak of January 2008 (222.1).
Average house prices increased in all nine English regions over the year to June 2014 (Figure 5). The largest increase was again in London at 19.3% followed by the South East (9.7%) and the East (7.9%). Excluding London and the South East, UK house prices increased by 6.3% over the year to June 2014.
The indices for three out of the nine English regions are higher than at their pre-financial crisis peak in 2008. The index for London (236.6) is 35.6% higher than the pre-financial crisis peak in January 2008 (174.5). The South East is 9.2% above the peak of January 2008 (166.5) with an index of 181.8 in June 2014. The East is 6.5% above the January 2008 peak (168.4) with an index of 179.3 (Figure 6).
Average mix-adjusted house prices in June 2014 stood at £276,000 in England, £167,000 in Wales, £137,000 in Northern Ireland and £193,000 in Scotland (Figure 7). In June 2014, London continues to be the English region with the highest average house price at £499,000 and the North East had the lowest average house price at £150,000. London, the South East and the East all had prices higher than the UK average price of £265,000.
Excluding London and the South East, the average UK mix-adjusted house price was £201,000.
The average price for properties bought by first-time buyers increased by 12.0% over the year to June 2014, up from an increase of 11.3% in May 2014 (Figure 8). This is the highest annual increase for first-time buyers since April 2010, when prices increased by 12.4%. In June 2014 the average price paid for a house by a first-time buyer was £204,000.
The average price for properties bought by former owner-occupiers (existing owners) increased by 9.5% in the year to June 2014, down from an increase of 10.0% in May 2014. In June 2014, the average price paid for a house by a former owner-occupier was £304,000.
During the year to June 2014 prices paid for new dwellings increased by 3.9% on average, compared with an increase of 7.0% in the year to May 2014 (Figure 9). The average UK house price for new dwellings in June 2014 was £243,000.
During the year to June 2014 prices paid for pre-owned dwellings increased by 10.7% on average, compared with an increase of 10.6% in the year to May 2014. The average UK house price for pre-owned dwellings in June 2014 was £266,000.
ONS HPI monthly and quarterly reference tables (3.47 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 estimates for June 2014 and scheduled quarterly revisions to April and May 2014 data to account for those lenders who provide data on a quarterly basis. The seasonally adjusted figures for the last 12 months in Table 7 have also been revised this month as scheduled. This month, tables 10 to 19 have been updated with the latest data for the second quarter of 2014.
ONS HPI annual tables (1.15 Mb Excel sheet) (number 20 to 39). This reference table contains all the annual live tables. No annual tables have been updated this month. The next set of updates to annual tables will be in March 2015.
ONS weights summary (74 Kb Excel sheet) . This reference table provides a summary of the aggregated mix-adjustment weights used in the production of the HPI for the period 2011 to 2014. The mix-adjustment weights are updated in the February HPI each year.
The Office for National Statistics would welcome your views on the data presented in this statistical bulletin. Please contact the House Price Index team using the email address below to discuss any aspect of the data, including your views on how ONS can improve the data.
New this month
New house price data for June 2014 are published this month. The monthly and quarterly reference table (3.47 Mb Excel sheet) has been updated to include data for June 2014 and the second quarter of 2014.
Revisions this month
April and May 2014 data have been revised this month to incorporate transactions from those lenders that provide data on a quarterly basis. There are small revisions to the seasonally adjusted series for the last 12 months, which are expected from the monthly seasonal adjustment process.
Revisions next month
The July 2014 HPI will incorporate changes from the annual review of the seasonal adjustment process. This review may lead to small revisions to the seasonally adjusted series going back to February 2002.
Taking forward the recommendations from the National Statistician's review of UK house price statistics - August 2014 announcement
In November 2013 it was announced that the four producers of official house price statistics (Land Registry; Office for National Statistics; Registers of Scotland and Land & Property Services, Northern Ireland) were continuing to investigate options for the production of a single definitive UK House Price Index (HPI). This work was triggered in response to a recommendation from the 2010 National Statistician’s Review of House Price Indices.
During 2014, work has focused on reviewing the available data sources and developing a methodology that would allow a collaborative production of a new, definitive HPI. This work had a clear goal to identify options for a HPI that would produce coherent house price data at the UK, national, regional and sub-regional level, and covering all UK private residential housing market transactions.
A draft methodology has been identified and each of the above organisations has agreed that the work should progress to a consultation phase, where users of house price statistics will be invited to comment on the intention to develop a new HPI and the proposed methodology to be used.
The consultation will allow the proposed methodology to be refined where necessary and to firm up the development costs for the production and implementation of a new HPI. These costs will then be considered by each department against ongoing priorities and resource constraints before a final decision is taken to implement the new HPI. Depending on the outcome of this decision, it is anticipated that a new HPI would first be published in early 2016.
The consultation will be published in September 2014 and will provide users with details of the proposed methodology, data sources, plans for production and publication, and the effect the new HPI will have on the publication of current HPIs (assuming the new HPI development moves to publication).
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 2013 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 labelled 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. A high level summary of the weights used in the calculation of the ONS HPI can be found in the HPI weights summary reference table (74 Kb Excel sheet) .
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 January 2011 (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 GOV.UK 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 (974.4 Kb Pdf) .
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 Official Quarterly Housing Market Statistics
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 Quarterly Housing Market Statistics 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 Acadata House Price Index
The LSL Acadata (previously 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 Acadata.
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 June 2014 data. Future publication dates for this statistical bulletin are available via the Publication Hub.
Details of the policy governing the release of new data are available from the Media Relations Office. Also available is a list of the names of those given pre-release access to the contents of this release.
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: firstname.lastname@example.org
|Christopher Jenkins||+44 (0)1633 455474||Office for National Statisticsemail@example.com|