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 2.3 per cent over the year to May 2012, up from a 1.4 per cent increase in the year to April 2012. The average UK mix-adjusted house price in May 2012 was £228,000.
Seasonal adjustment is a method for removing seasonal effects from a time series. When seasonally adjusted, average house prices showed no change over the month to May 2012, compared with a decrease of 0.9 per cent over the month to May 2011.
|UK All Dwellings|
|Index (Not seasonally adjusted)||% 12 month change (Not seasonally adjusted)||Index (Seasonally adjusted)||% monthly change (Seasonally adjusted)||£ (Not seasonally adjusted)|
Prices rounded to the nearest £1,000.
During the year to May 2012, average house prices increased in England by 2.6 per cent and in Wales by 3.5 per cent. However, prices decreased in Northern Ireland by 10.3 per cent and Scotland by 1.0 per cent.
Average house prices increased in five of the nine English regions over the year to May 2012. The largest increase was in London (7.2 per cent) followed by the South East (3.4 per cent) and the East Midlands (2.3 per cent). The London increase was the largest recorded since November 2010 and the increases in the South East and East Midlands were the largest recorded since December 2010. The largest decreases were 1.6 per cent in the North West and 1.2 per cent in the West Midlands.
Average mix-adjusted house prices in May 2012 stood at £237,000 in England, £154,000 in Wales, £132,000 in Northern Ireland and £177,000 in Scotland.
In May 2012, London continued to be the English region with the highest average house price (£388,000). The North East had the lowest average house price (£143,000). London, the South East and the East of England all had prices higher than the UK average price of £228,000.
Excluding London and the South East, the average UK mix-adjusted house price was £183, 000.
The average price for properties bought by first time buyers increased by 2.8 per cent over the year to May 2012 compared with an annual increase of 1.5 per cent in April 2012. During May 2012 the average price paid for a house by a first time buyer was £171,000.
The average price for properties bought by former owner occupiers (existing owners) increased by 2.1 per cent in the year to May 2012 compared with an increase of 1.4 per cent in April 2012. In May 2012 the average price paid for a house by a former owner occupier was £262,000.
During the year to May 2012 prices paid for pre-owned dwellings increased by 2.0 per cent on average compared with an increase of 1.1 per cent in the year to April 2012. The average UK house price for pre-owned dwellings in May 2012 was £229,000.
During the year to May 2012 prices paid for new dwellings increased by 6.2 per cent on average compared with an increase of 5.1 per cent in the year to April 2012. The average UK house price for new dwellings in May 2012 was £216,000.
ONS HPI monthly and quarterly reference tables (numbers 1 to 19). (3.07 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 May 2012. 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 (numbers 20 to 39). (1.13 Mb Excel sheet) This reference table contains all the annual live tables transferred to ONS from DCLG. Tables 20, 21, 29, 30, 35, 36, 37, 38 and 39 have been updated with 2011 data.
New this month
Transfer of HPI from DCLG to ONS
Following the announcement by the National Statistician on 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 (3.07 Mb Excel sheet) and another reference table for the annual tables (1.13 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.
Taking forward the recommendations from the National Statistician’s review of UK house price statistics.
In December 2010, the UK 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 review recommendations. The departments involved in these discussions are Land Registry for England and Wales, Registers of Scotland, Department of Finance and Personnel Northern Ireland and the Office for National Statistics.
It has been agreed that ONS will take the lead in the development of its house price index to become the headline 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 will continue to be published in their current format, which is likely to be timelier than the headline measure, but 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.
A project will commence in June 2012 to take forward the development work. Further details will be published in August 2012 which will identify the development work which will take place and a timetable for the completion of work.
Seasonal adjustment review
The July 2012 HPI published on 18 September 2012 will incorporate recommendations from a review of the seasonal adjustment process. This will be likely to produce small revisions to the seasonally adjusted indices going back to February 2002 (table 7 in the statistical bulletin).
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 per cent 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.
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 per cent 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 on the DCLG website.
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 website of the DCLG.
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 price 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.
Registers of Scotland House Price Index
Registers of Scotland records all the property transactions in Scotland. It produces a housing price index based on arithmetic means of these transactions, which is published in the second month after the month to which the figures refer to.
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.
In addition, other indices are also produced. Rightmove tracks the asking prices of properties in its website, the Royal Institute of Chartered Surveyors (RICS) produces an opinion survey of its surveyors regarding the direction that prices are moving in, and LSL/Acadametrics estimates an average weighted house price based on completions for all counties.
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 May 2012 data. Future publication dates for this Statistical Bulletin are available via the ONS 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 (26.9 Kb Pdf) to the contents of this release.
The production of the HPI has been transferred from the Department for Communities and Local Government (DCLG) to the Office for National Statistics. The historical releases of the DCLG HPI and their corresponding tables can be found at the DCLG HPI website.
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