1. Main findings

UK house prices increased by 9.0% in the year to March 2016, up from 7.6% in the year to February 2016.

House price annual inflation was 10.1% in England, 2.1% in Wales, -6.1% in Scotland and 6.4% in Northern Ireland.

Annual house price increases in England were driven by an annual increase in London (13.0%), the South East (12.2%) and the East of England (12.1%).

Excluding London and the South East, UK house prices increased by 5.9% in the 12 months to March 2016.

On a seasonally adjusted basis, average house prices increased by 2.5% between February 2016 and March 2016.

In March 2016, prices paid by first-time buyers were 9.7% higher on average than in March 2015.

For owner-occupiers (existing owners), prices increased by 8.7% for the same period.

UK average mix-adjusted house price in March 2016 was £292,000.

This is the final release of the ONS House Price Index (HPI) which will be replaced by the new UK House Price Index from June 2016.

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2. About this statistical bulletin

Further to previous announcements, a new UK House Price Index (HPI) will be published on 14 June that replaces this version of the HPI. The new UK HPI will be published on the GOV.UK website although a high-level summary and links to the new UK HPI will be published on the ONS website. For further detail and support in accessing the new UK HPI, please contact hpi@ons.gsi,gov.uk.

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 us 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.

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3. House price index UK summary

UK average house prices increased by 9.0% over the year to March 2016, up from 7.6% in the year to February 2016 (Figure 1). The average UK mix-adjusted house price in March 2016 was £292,000.

In March 2016, the UK mix-adjusted house price index increased by 2.9% on February 2016 to reach a record high of 228.6 (Figure 2). The UK index is 23.2% higher than the pre-economic downturn peak of 185.5 in January 2008.

On a seasonally adjusted basis, average house prices increased by 2.5% between February 2016 and March 2016, compared with an increase of 1.2% in average prices during the same period a year earlier.

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4. House price index by country

During the year to March 2016, average house prices increased by 10.1% in England (up from 8.2% in the year to February 2016), 2.1% in Wales (down from 3.4%) and 6.4% in Northern Ireland (up from 3.6%). There was a 6.1% decrease in average house prices in Scotland (compared with a 0.1% decrease in the year to February 2016).

From 1 April 2015, UK stamp duty was replaced by land and buildings transactions tax in Scotland which, coupled with a significant increase in sales (a large proportion of which being high value properties) during March 2015, resulted in an annual increase of 14.6% in the year to March 2015. Despite Scotland seeing a small increase of 1.1% between February and March 2016, when comparing to the unusually high prices of March 2015 it results in an annual decrease of 6.1%.

The main movements for each country are:

  • the index for England in March 2016 was at a record high (227.8) - this is 3.1% higher than in February 2016 (221.0) (Figure 4) and is 26.0% higher than the pre-economic downturn peak in January 2008 (180.8)

  • the index for Wales in March 2016 was at a record high (227.7) – this is 0.7% higher than in February 2016 (226.1) and is 2.5% higher than the pre-economic downturn peak of January 2008 (222.1)

  • the index for Scotland in March 2016 (228.5) is 6.1% below the record level witnessed in March 2015 (243.2) – Scotland prices are now 0.9% below the pre-economic downturn peak of June 2008 (230.6)

  • the index for Northern Ireland in March 2016 (162.5) is 42.3% below the peak of August 2007 (281.5)

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5. House price index by region

The pace of annual house price growth was again varied across the 9 English regions in March 2016 (Figure 5). The largest annual increase was in London at 13.0% (up from 9.3% in the year to February 2016), followed by the South East (12.2% increase in the year to March 2016, up from 11.1% in the year to February 2016). The North East continues to have the lowest annual growth of the 9 regions, with no change in prices in the year to March 2016 (down from a 1.9% increase in the year to February 2016).

Excluding London and the South East, UK house prices increased by 5.9% over the year to March 2016, up from 5.4% in the year to February 2016.

The increased growth seen in some regions may be as a response to new stamp duty rates for buy-to-let properties and second homes coming into effect on 1 April 2016.

This month, average house prices in 7 of the 9 English regions are at record levels (Figure 6). The North East is the only English region yet to surpass its pre-economic downturn peak (prices in the North East remain 3.5% below the peak of January 2008).

The main regional price index movements for March 2016 are:

  • the price index for London reached a record high of 273.6 in March 2016 – this is up 2.2% on the previous record in January 2016 (267.6) and is 56.8% higher than the pre-economic downturn of January 2008 (174.5)

  • the price index for the South East reached a record high of 214.6 in March 2016 – this is up 1.7% on the previous record in January 2016 (211.0) and is 28.9% higher than the pre-economic downturn of January 2008 (166.5)

  • the price index for the East of England reached a record high of 216.8 in March 2016 – this is up 2.0% on the previous record in February 2016 (212.6) and is 28.7% higher than the pre-economic downturn of January 2008 (168.4)

  • the price index for the South West reached a record high of 205.2 in March 2016 – this is up 2.6% on the previous record in February 2016 (200.0) and is 14.1% higher than the pre-economic downturn of January 2008 (179.9)

  • the price index for the East Midlands reached a record high of 209.6 in March 2016 – this is up 0.8% on the previous record in January 2016 (208.1) and is 8.3% higher than the pre-economic downturn of January 2008 (193.5)

  • the price index for Yorkshire and The Humber reached a record high of 219.0 in March 2016 – this is up 0.1% on the previous record in August 2015 (218.8) and is 1.6% higher than the pre-economic downturn of January 2008 (215.6)

  • the price index for the North West reached a record high of 216.2 in March 2016 – this is up slightly on the previous record in August 2015 (216.1) and is 2.8% higher than the pre-economic downturn of January 2008 (210.4)

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6. Average house prices in countries and regions

Average mix-adjusted house prices in March 2016 stood at £307,000 in England, £176,000 in Wales, £193,000 in Scotland and £155,000 in Northern Ireland (Figure 7).

In March 2016, London continued to be the English region with the highest average house price at £552,000 and the North East had the lowest average house price at £158,000. London, the South East and the East of England all had prices higher than the UK average price of £292,000.

Excluding London and the South East, the average UK mix-adjusted house price was £221,000.

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7. House price index by type of buyer

The average price for properties bought by first-time buyers increased by 9.7% over the year to March 2016, up from an increase of 7.7% in the year to February 2016 (Figure 8). In March 2016, the average price paid for a house by a first-time buyer was £220,000.

The average price for properties bought by former owner-occupiers (existing owners) increased by 8.7% in the year to March 2016, up from an increase of 7.6% in the year to February 2016. In March 2016, the average price paid for a house by a former owner-occupier was £345,000.

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8. House price index by new and pre-owned dwellings

During the year to March 2016, prices paid for new dwellings increased by 8.1% on average, compared with an increase of 9.1% in the year to February 2016 (Figure 9). The average UK house price for new dwellings in March 2016 was £295,000.

During the year to March 2016, prices paid for pre-owned dwellings increased by 9.1% on average, compared with an increase of 7.5% in the year to February 2016. The average UK house price for pre-owned dwellings in March 2016 was £292,000.

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9. Development of a single, official house price index – progress update

A new UK House Price Index (HPI) will be published on 14 June that replaces this version of the HPI. The new UK HPI will be published on the GOV.UK website although a high-level summary and links to the new UK HPI will be published on the ONS website. The methodology for the new House Price Index (HPI) is presented in the article Development of a single Official House Price Index, published in February 2016.

Early historic estimates for the new official UK House Price Index were presented in the article Introducing the single official House Price Index, published in March 2016. The new UK HPI will be published in its entirety in June 2016 containing figures to April 2016 and then monthly thereafter, replacing the existing house price indices currently published by the Office for National Statistics and Land Registry for England and Wales.

For further information, please email: hpi@ons.gsi.gov.uk

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10. Economic context - March 2016

UK house prices continued to grow robustly in the year to March 2016. House prices grew at a rate of 9.0% in the 12 months to March 2016, the highest rate since March 2015 and an increase of 1.4 percentage points compared with February 2016. On a monthly (seasonally adjusted) basis, prices increased by 2.5% between February and March 2016, the highest increase since April 2004. House prices have now been growing since early 2012 and in March 2016 were 27.7% higher than their average level in 2007, before the economic downturn.

The increase in the 12-month rate in March was prominent in London, where prices increased by 13.0%, up from 9.3% in February 2016, and Northern Ireland, where prices increased by 6.4%, up from 3.6% in February. Higher rates of Stamp Duty Land Tax for additional properties introduced in England, Wales and Northern Ireland at the start of April 2016 is likely to have increased demand and possibly prices in the immediate run up to this change. In Scotland, new Land and Buildings Transactions Tax rates were introduced in April 2015, and in March 2015, annual house price inflation increased markedly to 14.6%. The effects of this have now unwound in the March 2016 rate, with house prices falling 6.1% compared with March 2015.

The continuing upward price pressures in the housing market may be a result of a robust demand outpacing supply: a view supported by a number of house market indicators. The volume of mortgage approvals - a leading indicator of housing purchases - grew by 19.5% in the year to March 2016. The number of UK home sales also continued to grow in the 3 months to March 2016 (Jan to Mar): rising by 19.9% relative to the preceding 3 months (Oct to Dec 2015). Data from the Royal Institution of Chartered Surveyors (RICS) also suggests buyer demand increased in 13 successive months to February 2016, with both demand and supply easing in March 2016.

On the supply side, the Bank of England’s Agents’ Summary of Business Conditions for February 2016 reported that housing activity remained subdued relative to pre-downturn levels and that market activity has been constrained by a shortage of properties for sale, a view corroborated by RICS. However, the latest ONS Output in the Construction Industry release indicated that new-build housing output increased by 3.4% in the previous 3 months (Jan to Mar) compared with the same period a year earlier.

Broader economic indicators suggest that the economy has continued to grow relatively strongly over recent periods, with output increasing by 0.4% in the first quarter (Jan to Mar) of 2016, a slightly slower rate than in Quarter 4 (Oct to Dec) 2015. Labour market conditions have continued to strengthen, as unemployment fell to 5.1% for the 3 months to March 2016: the lowest rate since the 3 months to October 2005. Annual pay growth also strengthened in 2015 compared with 2014, although the rate of this growth has eased in recent months. These improvements, along with falls in the inactivity rate and relative stability in recent months, suggest confidence in labour market outcomes remains high However, house price growth continues to outpace real earnings growth considerably, despite the improvements in nominal pay growth over the past year and low inflation.

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11. Datasets

The HPI monthly and quarterly datasets provide 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 March 2016. The seasonally adjusted figures in Table 7 have been revised this month as scheduled. This month, Tables 10 to 19 have been updated with the latest data for the first quarter (January to March) of 2016.

The HPI annual dataset 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 July 2016.

The HPI weights summary datasets provide a summary of the aggregated mix-adjustment weights used in the production of the HPI for the period 2007 to 2016. The mix-adjustment weights are updated in the February HPI each year.

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12. How are we doing?

We 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 we can improve the data.

hpi@ons.gsi.gov.uk

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13 .Background notes

1. New this month

New house price data for March 2016 are published this month. The monthly and quarterly datasets have been updated to include data for March 2016 and the first quarter (January to March) of 2016.

Revisions this month

January and February 2016 have been revised 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

Further to previous announcements, a new UK House Price Index (HPI) will be published on 14 June that replaces this version of the HPI. The new UK HPI will be published on www.gov.uk although a high-level summary and links to the new UK HPI will be published via www.ons.gov.uk. For further detail and support in accessing the new UK HPI, please contact hpi@ons.gov.uk.

2. 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 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.

3. Revisions policy

At the end of every quarter, as well as releasing final figures for the latest month, we revise the figures from the previous 2 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 our 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 an “R” and the reason for the revision explained under the “New this month” section of the background notes.

4. Methodology

Data sources

Since December 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 to 70% of all UK mortgage completions.

Quality

A Quality and Methodology Information (QMI) report for the HPI describes in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.

Price methodology

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 published on the HPI user guidance webpage.

Re-weighting

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 3 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 dataset.

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.

Seasonal adjustment

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-13-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.

5. 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 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 and Property Services assisted by the Northern Ireland Statistics and 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 and 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 or unitary district or London borough levels. The index can be accessed at Acadata.

6. Accessibility

This bulletin includes the March 2016 data. Future publication dates for the UK House Price Index are available via the release calendar

7. Code of Practice for Official Statistics

Details of the policy governing the release of new data are available from the UK Statistics Authority.

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Contact details for this Statistical bulletin

Rhys Lewis
hpi@ons.gsi.gov.uk
Telephone: +44 (0)1633 456400