UK House Price Index: November 2015

• UK house prices increased by 7.7% in the year to November 2015, up from 7.0% in the year to October 2015

• House price annual inflation was 8.3% in England, 1.3% in Wales, 0.4% in Scotland and 4.6% in Northern Ireland

• Annual house price increases in England were driven by an annual increase in the East (10.2%), the South East (9.8%) and London (9.8%)

• Excluding London and the South East, UK house prices increased by 5.8% in the 12 months to November 2015

• On a seasonally adjusted basis, average house prices increased by 0.8% between October and November 2015

• In November 2015, prices paid by first-time buyers were 7.4% higher on average than in November 2014

• For owner-occupiers (existing owners), prices increased by 7.8% 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 7.7% over the year to November 2015, up from 7.0% in the year to October 2015 (Figure 1). The average UK mix-adjusted house price in November 2015 was £288,000.

In November 2015, the UK mix-adjusted house price index increased by 0.6% from the previous record level witnessed in October 2015 to reach a new record of 221.5 (Figure 2). The UK index is 19.4% higher than the pre-economic downturn peak of 185.5 in January 2008.

On a seasonally adjusted basis, average house prices increased by 0.8% between October and November 2015, compared with an increase of 0.1% in average prices during the same period a year earlier.

During the year to November 2015, average house prices increased by 8.3% in England (up from 7.4% in the year to October 2015), 1.3% in Wales (up from 1.0%), 0.4% in Scotland (down from 0.9%) and 4.6% in Northern Ireland (down from 10.3%).

The main movements for each country are:

• the index for England reached a new record of 220.3 in November 2015 (Figure 4) – this is 0.7% above the previous record level witnessed in October 2015 (218.7) and 21.8% higher than the pre-economic downturn peak in January 2008 of 180.8

• the index for Wales in November 2015 (222.8) is 0.8% below the record level of 224.6 in January 2015 – house prices in Wales are 0.3% higher than the pre-economic downturn peak of January 2008 (222.1)

• the index for Scotland in November 2015 (228.7) is 6.0% below the record level witnessed in March 2015 (243.2) – Scotland prices are now 0.8% below the pre-economic downturn peak of June 2008 (230.6)

• the index for Northern Ireland in November 2015 (166.0) is 41.0% below the peak of August 2007 (281.5)

The pace of annual house price growth was again varied across the 9 English regions in November 2015 (Figure 5). The largest annual increase was in the East at 10.2% (down from 10.4% in the year to October 2015) followed by the South East (9.8% increase in the year to November 2015, up from 9.5% in the year to October). London prices also increased by 9.8% over the year to November 2015 (up from 7.7% in the year to October 2015). The North East had the lowest annual growth of the 9 regions, with prices increasing 0.4% in the year to November 2015 (down from 2.9% in the year to October).

Excluding London and the South East, UK house prices increased by 5.8% over the year to November 2015, up from 5.6% in the year to October 2015.

This month, average house prices in 5 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 3.3% below the peak of January 2008).

The main regional price index movements for November 2015 are:

• the price index for the South East reached a record level of 206.1 in November 2015 – this is up 0.3% from the previous record in October 2015 (205.5) and 23.8% higher than the pre-economic downturn peak in January 2008 (166.5)

• the price index for London reached a record level of 260.8 in November 2015 – this is up 1.1% from the previous joint record in September and October 2015 (257.9) and 49.5% higher than the pre-economic downturn peak of January 2008 (174.5)

• the price index for the East Midlands reached a record level of 207.1 in November 2015 – this is up 0.5% from the previous record in October 2015 (206.1) and 7.0% higher than the pre-economic downturn peak in January 2008 (193.5)

• the price index for the East reached a record level of 207.9 in November 2015 – this is up 1.2% from the previous record of 205.5 in October 2015 and 23.5% higher than the pre-economic downturn peak in January 2008 (168.4)

• the price index for the West Midlands reached a record level of 200.0 in November 2015 – this is up 1.8% from the previous joint record in July and September 2015 (196.4) and 7.9% higher than the pre-economic downturn peak in October 2007 (185.4)

Average mix-adjusted house prices in November 2015 reached £302,000 in England and stood at £173,000 in Wales, £195,000 in Scotland and £158,000 in Northern Ireland (Figure 7).

In November 2015, London continued to be the English region with the highest average house price at £537,000 and the North East had the lowest average house price at £157,000. London, the South East and the East all had prices higher than the UK average price of £288,000.

Excluding London and the South East, the average UK mix-adjusted house price was £219,000.

The average price for properties bought by first-time buyers increased by 7.4% over the year to November 2015, up from an increase of 5.9% in the year to October 2015 (Figure 8). In November 2015, the average price paid for a house by a first-time buyer was £221,000.

The average price for properties bought by former owner-occupiers (existing owners) increased by 7.8% in the year to November 2015, up from an increase of 7.4% in the year to October 2015. In November 2015, the average price paid for a house by a former owner-occupier was £335,000.

During the year to November 2015, prices paid for new dwellings increased by 14.0% on average, compared with an increase of 14.8% in the year to October 2015 (Figure 9). The average UK house price for new dwellings in November 2015 was £294,000.

During the year to November 2015, prices paid for pre-owned dwellings increased by 7.2% on average, compared with an increase of 6.4% in the year to October 2015. The average UK house price for pre-owned dwellings in November 2015 was £288,000.

UK house prices continued to grow strongly in the year to November 2015. House prices grew at a rate of 7.7% in the 12 months to November 2015: the fastest rate of annual increase since March 2015 and the fourth consecutive increase in the annual growth rate. On this basis, UK house prices have been growing since early 2012. On a monthly (seasonally adjusted) basis, prices grew by 0.8% between October and November 2015, unchanged on the October 2015 rate. The increase in the annual rate of price growth reflects a further increase in house prices in London (up 9.8% in the year to November 2015), the South East (9.8%) and the East of England (10.2%).

Upward price pressures may be a result of a shortage of supply and strengthening demand in the housing market, a view supported by a number of house market indicators. There continues to be weak supply in the market, with the Bank of England’s Agents’ Summary of Business Conditions for October reporting a shortage of properties available for sale. This suggests the lack of homes available for sale increases competition and supports prices. In the new-build market, the ONS Output in the Construction Industry release indicates total housing output fell 1.6% in the year to October, although this was a smaller contraction than the three previous months. In the secondary market, the Bank of England’s Agents’ Summary of Business Conditions for Q3 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 new sales instructions decreased for the tenth month in succession.

While supply remains tight, demand for house purchases remains strong, – as highlighted in the Bank of England’s November Inflation Report. The volume of mortgage approvals - a leading indicator of housing purchases - grew by 20.8% in the year to November 2015, down from 22.0% in the year to October 2015 . The number of UK home sales also continued to grow in the three months to November (Sep-Nov): rising by 1.4% relative to the preceding three months (Jun-Aug), slightly lower than the equivalent rate in October. Data from the Royal Institution of Chartered Surveyors also suggests that growth in buyer demand eased in November 2015, falling to its most subdued growth rate since April 2015.

Broader economic indicators suggest that the economy has continued to grow relatively strongly over recent periods, with output increasing by 0.4% in the third quarter of 2015, slightly slower than in Q2 2015. Labour market conditions have continued to strengthen, as unemployment fell to 5.2% for August to October 2015: the lowest rate since the three months to January 2006. Annual pay growth has also strengthened in 2015 compared to 2014. These improvements, along with a resurgence in job-to-job moves and broader evidence of tightening, 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.

The HPI monthly and quarterly reference table (3.73 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 November 2015. The seasonally adjusted figures in Table 7 have been revised this month as scheduled.

The HPI annual reference table (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 (79.5 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