UK House Price Index: July 2021

• UK average house prices increased by 8.0% over the year to July 2021, down from 13.1% in June 2021.
• The average UK house price was £256,000 in July 2021, which is £19,000 higher than this time last year, following the record high of £265,000 in June 2021.
• Average house prices increased over the year in England to £271,000 (7%), in Wales to £188,000 (11.6%), in Scotland to £177,000 (14.6%) and in Northern Ireland to £153,000 (9.0%).
• London continues to be the region with the lowest annual growth (2.2%) for the eighth consecutive month.

UK average house prices increased by 8.0% over the year to July 2021

The latest house price data published on GOV.UK by HM Land Registry for July 2021 show that average house prices in the UK increased by 8.0% in the year to July 2021, down from 13.1% in the year to June 2021 (Figure 1).

Because of the impact of the coronavirus (COVID-19) pandemic on both the number and supply of housing transactions, we might see larger revisions to the published House Price Index (HPI) estimates than usual. Fewer transactions are available than expected for the July 2021 estimate. As a result, there may be increased volatility in this month's estimates, particularly at the lower geographical levels where transaction volumes are smaller. We are looking at options to improve this, including working with data suppliers. Further information on this can be found in Section 7: Measuring the data.

The latter half of 2020 saw the UK’s average house price growth accelerating. This trend continued into 2021 with the UK average house price at a record level in June 2021 (£265,000) but this has decreased in July 2021 to £256,000.

On 8 July 2020, the Chancellor of the Exchequer announced a suspension of the tax paid on property purchases with immediate effect in England and Northern Ireland. The suspension came into effect slightly later, on 15 July in Scotland and 27 July in Wales. In England and Northern Ireland, properties up to the value of £500,000 would incur no tax, while the thresholds for Scotland and Wales were £250,000. These changes in the tax paid on housing transactions may have allowed sellers to request higher prices as the buyers’ overall costs are reduced.

On 3 March 2021, the Chancellor of the Exchequer announced an extension to the Stamp Duty holiday in England and Northern Ireland. This meant that the tax holiday was extended until 30 June 2021 after which the threshold decreased to £250,000 until 30 September 2021. From 1 October 2021, the Stamp Duty thresholds will revert to what they were before 8 July 2020. The tax holiday for Scotland ended on 31 March 2021. The tax holiday in Wales ended on 30 June 2021.

As the tax breaks were originally due to conclude at the end of March 2021, it is likely that March’s average house prices were slightly inflated as buyers rushed to ensure their house purchases were scheduled to complete ahead of this deadline. This effect was then further exaggerated in June 2021, in line with the extension to the holiday on taxes paid on property purchases in England, Wales and Northern Ireland. Average house prices for July returned to similar levels seen earlier in the year. Monthly property transactions statistics published by HM Revenue and Customs show that the seasonally adjusted number of transactions in July 2021 fell to 73,740, following the record number of 198,420 transactions in June 2021.

The average UK house price was £256,000 in July 2021; this is £19,000 higher than in July 2020 (Figure 2).

On a non-seasonally adjusted basis, average house prices in the UK decreased by 3.7% between June and July 2021, compared with an increase of 0.8% in the same period a year ago.

On a seasonally adjusted basis, average house prices in the UK decreased by 4.4% between June and July 2021, following an increase of 4.5% in the previous month.

The average house price in Scotland increased by 14.6% over the year to July 2021, up from an increase of 11.8% in the year to June 2021. The average house price in Scotland is now at a record level of £177,000.

The average house price in Wales increased by 11.6% over the year to July 2021, down from an increase of 17.0% in June 2021, with the average house price in Wales now at £188,000.

The average house price in England increased by 7.0% over the year to July 2021, down from an increase of 13.2% in the year to June 2021. The average house price in England is now at £271,000.

The average house price in Northern Ireland increased by 9.0% over the year to Quarter 2 (April to June) 2021. Northern Ireland remains the cheapest UK country to purchase a property in, with the average house price at £153,000 (Figure 3).

The North East was the region with the highest annual house price growth, with average prices increasing by 10.8% in the year to July 2021. This was down from 15.8% in June 2021 (Figure 4).

The lowest annual growth was in London, where average prices increased by 2.2% over the year to July 2021, down from 5.1% in June 2021.

London’s average house prices remain the most expensive of any region in the UK, at an average of £495,000 in July 2021.

The North East continued to have the lowest average house price, at £145,000, having surpassed its pre-economic downturn peak of July 2007 in December 2020 (Figure 5).

House Price Index (HPI)

The House Price Index (HPI) measures the price changes of residential housing as a percentage change from a specific time period (12 months prior or a base period, where the HPI in 2015 equals 100).

House price inflation

House price inflation in the UK is the rate at which the prices of residential properties purchased in the UK rise and fall.

Non-seasonally adjusted

A non-seasonally adjusted series is one that includes seasonal or calendar effects.

Seasonally adjusted

A seasonally adjusted series is one that has been subject to a widely used technique for removing seasonal or calendar effects from time series data.

The UK House Price Index (HPI) is a joint production by HM Land Registry (HMLR), Registers of Scotland, Land and Property Services Northern Ireland, and the Office for National Statistics (ONS). HM Land Registry publishes the main publication of the UK HPI on the GOV.UK website (9:30am, 15 September 2021). It includes full details, including commentary, historical data tables and analytical tools.

Coronavirus

In the past 12 months, all those involved in the property market have been affected by coronavirus (COVID-19). HMLR is no different, and as a result of this, the HPI data are not as complete as they could be. HMLR are focusing on their core purpose of registering land and this includes recording the price paid for a property.

This means that the HPI may be subject to increased revisions as more data are added over the coming months.

HMLR’s priority is to reduce any delays, both those caused by the pandemic and those existing beforehand. To simultaneously deliver their services while promoting public health, they are adjusting their resources where necessary. This includes introducing automation where practical, and recruiting and training more than 500 new staff.

We have temporarily changed the date we receive the transaction data from HMLR. Because of this, we receive more transactions than those immediately seen in the published Price Paid Data.

The processing of new build properties has been more affected than the processing of “old build” properties. To address this, we have pooled new build transactions for certain months in England and Wales:

• January 2021 includes new build transactions from December 2020 and January 2021 for England and Wales
• February 2021 includes new build transactions from January and February 2021 for England and Wales
• March 2021 includes new build transactions from January, February and March 2021 for England and Wales
• April 2021 includes new build transactions from February, March and April 2021 for England and Wales
• May 2021 includes new build transactions from March, April and May 2021
• June 2021 includes new build transactions from April, May and June 2021
• because of the nature of the processing of the new builds, these are never included in the model for the first estimate, so July 2021 has not been affected

These changes might lead to larger revisions to published estimates than usual as we reduce the reliance on pooling. Further information on how we usually process the new build properties can be found in the Quality and methodology guidance.

Transaction numbers used in the UK HPI

As sales only appear in the UK HPI once the purchases have been registered (based on completed sales rather than advertised or approved prices), there can be a delay before transactions feed into the index. Estimates for the most recent months are provisional and likely to be updated as more data are incorporated into the index.

The latest estimates for July 2021 are based on approximately 8,100 records for England. These currently represent roughly 13% of monthly property transactions (as published by HM Revenue and Customs), approximately 6,200 records for Scotland (58% of transactions) and approximately 600 records for Wales (14% of transactions). This represents the number of records that are available at the time of calculating the UK HPI and not the number of transactions that have taken place. As time progresses, more records will become available for July, in line with our published revision policy.

However, it should be noted that there are some coverage differences between the sales volumes used in the UK HPI dataset and the monthly property transactions statistics data. This means that the two are not directly comparable, and sales volumes in the UK HPI are unlikely to ever reach the transaction levels published by HM Revenue and Customs (HMRC). It is believed that the main reason for this difference is that residential properties where the buyer or seller is a corporate body, company or business are excluded from the HM Land Registry data in the UK HPI, but included in HMRC property transaction statistics.

Upcoming changes

A change to the geography of some local authorities will be made in the August 2021 release (release date 20 October 2021). The changes are in line with the updates given by ONS Geography. These include:

• Corby (E07000150), East Northamptonshire (E07000152), Kettering (E07000153) and Wellingborough (E07000156) will merge to create a new local authority “North Northamptonshire” (E06000061)
• Daventry (E07000151), Northampton (E07000154) and South Northamptonshire (E07000155) will merge to create a new local authority “West Northamptonshire” (E06000062)

These changes were initially intended to be incorporated into this publication, but have been delayed slightly, because of the additional time required to quality assure the changes.

Data sources

The main sources of data used in the UK are HM Land Registry for England and Wales, Registers of Scotland, and HM Revenue and Customs’ (HMRC’s) Stamp Duty Land Tax data for the Northern Ireland HPI.

Methods

The method for calculating the UK House Price Index can be found in our Quality and Methodology guidance on GOV.UK.

Quality

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the guidance page of the main release published by HM Land Registry on GOV.UK.

Further information on strengths and limitations of the data can be found in Section 1.4 of the GOV.UK Quality and methodology guidance.