This is a high level summary of the first publication of a new UK House Price Index (HPI), which replaces the previous house price indices separately published by the Land Registry and the Office for National Statistics. For full details, including commentary, historical data tables and analytical tools please see the main publication of the new HPI, published today on the GOV.UK website.
The new UK HPI is a joint production by Land Registry, Land and Property Services Northern Ireland, Office for National Statistics and Registers of Scotland.
The new UK HPI has been published initially as an experimental official statistic to allow for users to acclimatise to the format of the new HPI, to evaluate user reaction to the new data, evolve the publication of data further to meet user requirements and to further develop the data sources used in the production. Whilst the methodology for the new UK HPI has been finalised, further work is taking place to secure additional property attributes data (such as from Scottish Assessors) that will supplement and provide additional assurance to the production process going forward.
It is expected that we will seek to take the necessary steps to remove the experimental status at the end of 2016, once the above points have been implemented and then progress with the assessment of the new UK HPI as a National Statistic.
Please note that the Northern Ireland Residential Property Price Index, used as a component source in the production of the new UK HPI remains an official statistic (i.e. this is not classified as experimental).Nôl i'r tabl cynnwys
UK average house prices have increased by 8.2% in the year to April 2016 (down from 8.5% in the year to March 2016), continuing the strong growth seen since the end of 2013.
The average UK house price was £209,000 in April 2016. This is £16,000 higher than in April 2015, and £1,300 higher than last month.
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The main contribution to the increase in UK house prices came from England, where house prices increased by 9.1% over the year to April 2016, with the average price in England now £225,000. Wales saw house prices increase by 1.7% over the latest 12 months to stand at £139,000. In Scotland, the average price increased by 3.3% over the year to stand at £138,000. The average price in Northern Ireland is currently £118,000.
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On a regional basis, London continues to be the region with the highest average house price at £470,000, followed by the South East and the East of England, which stand at £302,000 and £263,000 respectively. The lowest average price continues to be in the North East at £122,000.
London was also the region which showed the highest annual growth, with prices increasing by 14.5% in the year to April 2016. The East of England (13.6%) and the South East (12.3%) also had high annual growth. The lowest annual growth was in the North East, where prices increased by 0.1% over the year.
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The new HPI introduces improved methodology to address limitations with the previous house price indices published by Land Registry and ONS, notably:
- the inclusion of both cash sales and new dwellings in calculations to provide full coverage of the housing market
- the use of a more appropriate calculation of average price that is not as sensitive to extreme valued property
- a calculation process that ensures the price index is representative of the current housing market
- publication of average prices that are fully comparable over time
The introduction of improved methodology and data sources has led to differences in published prices when comparing the new HPI to the previous HPIs published by Land Registry and ONS. However, when comparing the respective trends over time, the three series show very similar movements.
Impact on Price
The difference in average price levels when comparing the new HPI to the old ONS HPI is mainly caused by the choice of formula used to average prices. The new UK HPI uses a geometric mean as opposed to the arithmetic mean used in the old ONS HPI. The arithmetic mean is sensitive to extreme property values and as a result the prices can be skewed upwards by high value property. The geometric mean is less sensitive to these values, although it does continue to represent them in the calculation process. Improvements to other aspects of the methodology will also contribute to the differences (such as the inclusion of cash sales), although the impact of these is more difficult to quantify.
The difference between the new HPI and old Land Registry average price is mainly caused by the new HPI being more representative of current trends in the property market. The old Land Registry HPI is based on a typical set of property from April 2000, whereas the new UK HPI is updated each year to reflect current market trends.
Impact on growth
When comparing the annual growth from the three series, they all show very similar trends over time, suggesting the improved methodology is not having a large impact on house price growth over time.
Full details of the methodology can be found in the February 2016 article.Nôl i'r tabl cynnwys
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