House Prices up a massive 7.9% and new ONS report from June

Wednesday 06 April 2016

It's been a busy month for the ONS, having released their latest House Price Index report which shows a massive 7.9% increase in house prices across the UK, and also announcing a big shake up in the way the report will be produced.

The ONS House Price Index report for January shows that London and the South East dominated as usual with an 11.7% and 10.8% increases respectively.

Whilst of course the inclusion of London and the South East does skew the average house price across the UK somewhat, even when London and the South East are excluded from the figures, significant and widespread increases can still been seen across England.

Elsewhere, Scotland and Northern Ireland barely saw any increases from a year ago and Wales was the only Country to actually see a decrease in house prices, showing a drop of 0.3%. 

Excluding London and the South East, UK house prices increased by 5.1% in the 12 months to January 2016.

Average mix-adjusted house prices in January 2016 stood at a record high of £306,000 in England, £174,000 in Wales, £195,000 in Scotland and £153,000 in Northern Ireland.

Excluding London and the South East, the average UK mix-adjusted house price was £218,000.

>> READ THE FULL HPI REPORT <<

NEW HOUSE PRICE INDEX SIGNALS MAJOR SHAKE UP FOR REPORTING
ONS has also announced that from June it will produce a new improved HPI report, which they say will be more accurate.  

The new UK HPI report (England & Wales) will be produced by ONS and published monthly by Land Registry on GOV.UK. 

Changes to reporting were set in motion in response to recommendations made by the National Statistician's Review of Official House Price Statistics which said that current methodologies employed by ONS and the Land Registry didn't meet users needs.

The new UK HPI report promises to address the shortcomings of the current reporting indices which came in for a lot of criticism for projecting a conflicting and confusing picture of the housing market. 

The new report will replace both the current ONS report and the Land Registry's tracker and is being pitched as the single definitive housing index report. 

Some of the issues being addressed are:

  • the current ONS HPI is based on a sample of properties purchased using a mortgage - as such, it does not include any properties purchased using cash
  • the current Land Registry HPI uses repeat sales methodology, meaning that only those properties that have transacted more than once are included - therefore it does not include any new build properties and may under represent properties that are seldom transacted

Other improvements to the methodology, such as using the geometric mean to calculate average prices should mean that the new report will be more accurate and indicative of the majority of houses in a particular area. This method was recommended by International experts and the Government Statistical Service (GSS) Methodological Advisory Committee as it is less distorted by high values and is in line with international best practice. The current ONS HPI uses the arithmetic mean. where typically the average price can be skewed by high value property.

The new UK HPI will provide a range of information including:

  • type of dwelling (detached house, semi-detached house, terrace or flat)
  • type of property (new build or old)
  • volume of sales
  • cash or mortgage purchases (not available for Northern Ireland)
  • type of buyer (first-time buyer or existing owner; not available for Northern Ireland)

The new index is set to reveal that house prices have risen faster than previously predicted. Between January 2002 and December 2011 the average annual growth was 4.9% for the ONS HPI (England), 4.6% for the Land Registry HPI (England and Wales), and 6.1% for the new UK HPI (England and Wales).

>> READ THE FULL ANNOUNCEMENT <<