UK House Price Index: August 2015

• UK house prices increased by 5.2% in the year to August 2015, unchanged from 5.2% in the year to July 2015

• House price annual inflation was 5.6% in England, 0.8% in Wales, 2.9% in Northern Ireland and -0.9% in Scotland

• Annual house price increases in England were driven by an annual increase in the East (8.8%) and the South East (7.4%)

• Excluding London and the South East, UK house prices increased by 4.8% in the 12 months to August 2015

• On a seasonally adjusted basis, average house prices increased by 0.7% between July and August 2015

• In August 2015, prices paid by first-time buyers were 3.8% higher on average than in August 2014

• For owner-occupiers (existing owners), prices increased by 5.8% for the same period

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.

UK average house prices increased by 5.2% over the year to August 2015, unchanged from 5.2% in the year to July 2015 (Figure 1). The average UK mix-adjusted house price in August 2015 was £284,000.

In August 2015, the UK mix-adjusted house price index increased by 0.7% from the record level witnessed in July 2015 to reach 218.5 (Figure 2). The UK index is 17.8% higher than the pre-economic downturn peak of 185.5 in January 2008.

On a seasonally adjusted basis, average house prices increased by 0.7% between July and August 2015, compared with an increase of 0.7% in average prices during the same period a year earlier.

During the year to August 2015, average house prices increased by 5.6% in England (unchanged from 5.6% in the year to July 2015), 0.8% in Wales (up from 0.3%) and 2.9% in Northern Ireland (down from 7.4%). House prices fell 0.9% in Scotland over the last twelve months (compared with an annual fall of 1.3% last month).

The England house price index remained at a record level in August 2015 (Figure 4).

The main movements for each country are:

• the index for England reached 216.8 in August 2015 - this is 0.7% above the previous record level witnessed in July 2015 (215.3) and 19.9% higher than the pre-economic downturn peak in January 2008 of 180.8

• the index for Scotland in August 2015 (232.7) is 4.3% below the record level witnessed in March 2015 (243.2) - Scotland prices are now 0.9% above the pre-economic downturn peak of June 2008 (230.6)

• the index for Wales in August 2015 (223.3) is 0.6% below the record level of 224.6 in January 2015 - house prices in Wales are 0.5% higher than the pre-economic downturn peak of January 2008 (222.1)

• the index for Northern Ireland in August 2015 (158.7) is 43.6% below the peak of August 2007 (281.5)

The pace of annual house price growth varied across the 9 English regions in August 2015 (Figure 5). The largest annual increase was again in the East at 8.8% (up from 8.3% in the year to July 2015) followed by the South East (7.4% increase in the year to August 2015, up from 6.7%). The North East recovered from an annual fall in house prices in the year to July 2015 (-0.7%) to show annual growth of 2.9% in the year to August.

London prices increased by 4.2% over the year to August 2015 (down from 5.5% in the year to July 2015).

This month, average house prices in 5 of the 9 English regions are at record levels, with prices in Yorkshire and The Humber surpassing the pre-economic downturn peak of January 2008 for the first time (Figure 6). House prices in the East Midlands, West Midlands and London fell back slightly from the record levels witnessed in July 2015. The North East is the only English region yet to surpass its pre-economic downturn peak (prices in the North East remain 1.7% below the peak of January 2008).

The main regional price index movements for August 2015 are:

• the price index for the North West reached a record level of 215.5 in August 2015 - this is 0.9% higher than the previous record level of 213.6 in July 2015 and 2.4% higher than the pre-economic downturn peak of January 2008 (210.4)

• the price index for Yorkshire and The Humber reached a record level of 218.5 in August 2015 - this is 1.3% higher than the pre-economic downturn peak in January 2008 (215.6)

• the price index for the East reached a record level of 203.0 in August 2015 - this is up 1.4% from the previous record in July 2015 (200.1) and 20.5% higher than the pre-economic downturn peak in January 2008 (168.4)

• the price index for the South East reached a record level of 202.6 in August 2015 - this is up 1.4% from the previous record in July 2015 (199.8) and 21.7% higher than the pre-economic downturn peak in January 2008 (166.5)

• the price index for the South West reached a record level of 198.6 in August 2015 - this is up 3.3% from the previous record in July 2015 (192.2) and 9.9% higher than the pre-economic downturn peak in October 2007 (180.7)

• the price index for London is now 0.6% below the record level of 255.2 in July 2015 with an index of 253.6 in August 2015 - however, the London index is 45.3% higher than the pre-economic downturn peak in January 2008 (174.5)

Average mix-adjusted house prices in August 2015 stood at £298,000 in England, £174,000 in Wales, £151,000 in Northern Ireland and £198,000 in Scotland (Figure 7).

In August 2015, London continued to be the English region with the highest average house price at £522,000 and the North East had the lowest average house price at £160,000. London, the South East and the East all had prices higher than the UK average price of £284,000.

Excluding London and the South East, the average UK mix-adjusted house price was £217,000.

The average price for properties bought by first-time buyers increased by 3.8% over the year to August 2015, down from an increase of 4.4% in July 2015 (Figure 8). In August 2015, the average price paid for a house by a first-time buyer was £215,000.

The average price for properties bought by former owner-occupiers (existing owners) increased by 5.8% in the year to August 2015, up from an increase of 5.5% in July 2015. In August 2015, the average price paid for a house by a former owner-occupier was £332,000.

During the year to August 2015, prices paid for new dwellings increased by 9.5% on average, compared with an increase of 5.8% in the year to July 2015 (Figure 9). The average UK house price for new dwellings in August 2015 was £282,000.

During the year to August 2015, prices paid for pre-owned dwellings increased by 4.8% on average, compared with an increase of 5.1% in the year to July 2015. The average UK house price for pre-owned dwellings in August 2015 was £285,000.

The last progress update regarding the development of a single, official house price index was published in July 2015.

Since the last update, there have been delays in securing access to the data required to begin test production of the new index, however, work is still progressing. Property attributes data from the Valuation Office Agency (the council tax valuation list) has been secured, along with historic data from the Land Registry. Analysis has been taking place to match these two sources of data and to provisionally begin refining the methodology for the new house price index (279.7 Kb Pdf). Corresponding data for Scotland is expected to be available shortly, which will enable the new methodology to be finalised and subsequently allow the test production of the new index to commence. Additional work is also taking place to quality assure these input datasets, and to finalise the data sharing agreements necessary to ensure the ongoing supply and use of the data.

The immediate focus of the development work will now be to finalise and test the new methodology followed by the publication of an article detailing the proposed new methodology for users. It is expected that the article will be published in late November 2015.

The development Working Group has also been considering the transition to the new house price index for users. Further details regarding the transition plan will be published in early 2016, and will likely include a number of user events to fully explain the changes ahead of the anticipated first publication of the new index by June 2016.

For further details, please contact hpi@ons.gov.uk

The UK housing market showed signs of growth in August 2015, with prices increasing by 0.7% on a seasonally adjusted basis over the month. In annual terms, the rate of house price growth held steady at 5.2%, unchanged from July 2015. While this annual rate remains the joint lowest since September 2013, an ongoing shortage of supply combined with strengthening demand suggests upward pressure on house prices remains.

A number of indicators suggest that supply remains weak, with the lack of homes available for sale increasing competition and supporting prices. The ONS Output in the Construction Industry release for August reported a 5.8% fall in new housing construction in the year to August, the largest contraction in 29 months. In the secondary market, the Bank of England’s Agents’ Summary for August reported that weak activity could be self-perpetuating, as potential vendors remain reluctant to put their homes on the market without suitable properties available for purchase. These two dynamics are reflected in the latest data from the Royal Institution of Chartered Surveyors, which noted the stock of homes available for sale in August fell to a new record low.

While supply remains tight, demand for house purchases continues to grow – as highlighted in the Bank of England’s August Inflation Report. The volume of mortgage approvals, a leading indicator of housing purchases, grew by 2.9% over the month and 12.4% over the year in August 2015 to reach its highest level since January 2014. Mirroring this increase in demand, UK home sales have continued to pick-up despite the shortage of supply, and in the three months to August (Jun-Aug) were 6.5% higher than in the preceding three months (Mar-May).

Broader economic indicators suggest that the economy has continued to grow relatively strongly over recent periods, with output increasing by 0.7% in the second quarter of 2015. Labour market conditions have continued to strengthen, as unemployment fell to 5.5% for May to July 2015 and annual regular pay grew by 2.9%. These improvements, along with a resurgence in job-to-job moves and tightening more widely, suggest confidence in labour market outcomes remains high. House price growth continues to outpace real earnings growth, but the gap is closing as the slowing housing market coincides with strengthening nominal pay growth and low inflation. These recent trends have coincided with improved households’ income expectations as well as their economic position more generally.

The HPI monthly and quarterly reference table (3.59 Mb Excel sheet) (3.64 Mb Excel sheet) 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 August 2015. The seasonally adjusted figures in Table 7 have been revised this month as scheduled.

The HPI annual reference table (1.18 Mb Excel sheet) (1.19 Mb Excel sheet) 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 2016.

The HPI weights summary (83.5 Kb Excel sheet) (83.5 Kb Excel sheet) reference table provides a summary of the aggregated mix-adjustment weights used in the production of the HPI for the period 2007 to 2015. The mix-adjustment weights are updated in the February HPI each year.

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.gov.uk