UK House Price Index: November 2020

Monthly house price inflation in the UK, calculated using data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland.

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Cyswllt:
Email Natalie Jones

Dyddiad y datganiad:
20 January 2021

Cyhoeddiad nesaf:
17 February 2021

1. Main points

  • UK average house prices increased by 7.6% over the year to November 2020, up from 5.9% in October 2020, to stand at a record high of £250,000; this is the highest annual growth rate the UK has seen since June 2016.
  • Average house prices increased over the year in England to £267,000 (7.6%), Wales to £180,000 (7.0%), Scotland to £166,000 (8.6%) and Northern Ireland to £143,000 (2.4%).
  • London’s average house price surpassed £500,000 for the first time in November 2020.
  • The North East is the final English region to surpass its pre-economic downturn average house price peak of July 2007, to now stand at £140,000.
  • The Office for National Statistics (ONS) has released a public statement on the coronavirus (COVID-19) and the production of statistics; Section 7: Measuring the data describes the situation in relation to the UK House Price Index (HPI).
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2. UK house prices

UK average house prices increased by 7.6% over the year to November 2020

The latest house price data published on GOV.UK by HM Land Registry for November 2020 show that average house prices in the UK increased by 7.6% in the year to November 2020, up from 5.9% in the year to October 2020 (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. Further information on this can be found in Section 7: Measuring the data.

Over the past four years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England. The beginning of 2020 saw a pick-up in annual growth in the housing market before the coronavirus restrictions were put in place at the end of March 2020.

Price variations at the beginning of 2020 may reflect the unusual conditions in the housing market at the time. People were advised not to move house during the tightest restrictions in April and May. As such, property transactions completed during that time may have been more concentrated than usual among those without complicating factors, such as a chain. For example, first-time buyers – typically at the lower end of the price scale – may have been freer to complete transactions than former owner-occupiers, who may have had to co-ordinate multiple sales during lockdown.

Recent price increases may reflect a range of factors including pent-up demand, some possible changes in housing preferences since the pandemic and a response to the changes made to property transaction taxes across the nations.

Pent-up demand may have contributed towards an increase in house prices. The Bank of England’s Money and Credit November 2020 release reported that mortgage approvals for house purchases (an indicator of future lending) increased further in November 2020 to 105,000, the highest since August 2007.

The pandemic may have also caused house buyers to reassess their housing preferences. In our UK HPI data, we have seen the average price of detached properties increase by 8.5% in the year to November, in comparison with flats and maisonettes increasing by 5.4% over the same period.

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, coming 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. The tax holiday is due to end on 31 March 2021 across the whole of the UK. This may allow sellers to request higher prices as buyers’ overall costs are reduced.

The average UK house price was £250,000 in November 2020; this is £18,000 higher than in November 2019 (Figure 2).

On a non-seasonally adjusted basis, average house prices in the UK increased by 1.2% between October and November 2020, compared with a decrease of 0.4% in the same period a year ago.

On a seasonally adjusted basis, average house prices in the UK increased by 1.4% between October and November 2020, following an increase of 1.5% in the previous month.

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3. House prices by country

The average house price in Scotland increased by 8.6% over the year to November 2020, up from an increase of 6.6% in the year to October 2020, with the average house price in Scotland now at a record level of £166,000.

The average house price in England increased by 7.6% over the year to November 2020, up from 5.9% in the year to October 2020, with the average house price in England now at a record level of £267,000.

House price growth in Wales increased by 7.0% over the year to November 2020, up from 6.3% in October 2020, with the average house price in Wales at a record level of £180,000.

The average house price in Northern Ireland increased by 2.4% over the year to Quarter 3 (July to Sept) 2020. Northern Ireland remains the cheapest UK country to purchase a property in, with the average house price at £143,000 (Figure 3).

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4. House prices by region

London and Yorkshire and The Humber were the English regions with the joint highest annual house price growth, with average prices increasing by 9.7% in the year to November 2020. These were up from 4.6% (London) and 6.7% (Yorkshire and The Humber) in the year to October 2020 (Figure 4).

The lowest annual growth was in the East of England, where average prices increased by 4.8% over the year to November 2020.

London’s average house prices remain the most expensive of any region in the UK at an average of £514,000 in November 2020. This is a record high and the first time London’s average house prices have surpassed £500,000.

London’s annual house price growth has followed a sharp upward trend seen in most regions in recent months, likely reflecting a range of factors including pent-up demand, changes in housing preferences and the temporary reduction in property transaction taxes, which are due to end on 31 March 2021.

Looking at the picture within London, house prices have grown more quickly in Inner London than Outer London for some time. In November 2020, two London boroughs had annual house price growth above 20%, one is in Inner London (Kensington and Chelsea, at 28.6%), while the Outer London borough of Brent had annual price growth of 23.9%. The annual growth rate in Brent is partly caused by a base effect as the average house price decreased by 11.9% between October and November 2019 and increased by 2.8% between October and November 2020.

Demand for property in Inner London may be particularly responsive to temporary property tax changes as property prices are high and therefore so is the corresponding tax to be paid. In addition, compared with other regions of the UK, London has a relatively high proportion of properties bought for investment, including from cash buyers and overseas investors. As such, demand for property in Inner London is likely influenced by a broader range of factors than the rest of the UK, including the forthcoming introduction of additional property tax for non-UK residents and geopolitical circumstances such as the new route to UK citizenship for British Nationals Overseas in Hong Kong, being introduced in January 2021, both of which may push up demand for properties in Inner London.

The North East continued to have the lowest average house price, at £140,000, and is the final English region to surpass its pre-economic downturn peak of July 2007 (Figure 5).

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5. House Price Index data

UK House Price Index
Dataset | Released 20 January 2021
Monthly house price movements, including average price by property type, sales and cash mortgage sales, as well as information on first-time buyers, new builds and former owner occupiers. Data are collected by HM Land Registry and published on GOV.UK.

House price data: quarterly tables
Dataset | Released 18 November 2020
Quarterly house price data based on a sub-sample of the Regulated Mortgage Survey and an unrevised arithmetic mean version of the mix adjusted House Price Index (HPI) for Great Britain.

House price data: annual tables 20 to 39
Dataset | Released 19 August 2020
Annual house price data based on a sub-sample of the Regulated Mortgage Survey.

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6. Glossary

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 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.

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7. Measuring the data

The UK House Price Index (HPI) is a joint production by HM Land Registry, 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, 20 January 2021). It includes full details, including commentary, historical data tables and analytical tools.

Coronavirus

The ONS is working to ensure that the UK has the vital information needed to respond to the impact of the coronavirus (COVID-19) pandemic on our economy and society, this includes how we measure the UK HPI.

Because of the impact of the coronavirus pandemic on both the number and supply of housing transactions, some methodology changes have been made. The processing of new build properties has been more affected than the processing of “old build” properties. So, to address this, we have had to pool new build transactions for certain months:

  • September 2020 includes new build transactions from August and September 2020 for England and Wales
  • October 2020 includes new build transactions from September and October 2020 for England and Wales
  • because of the nature of the processing of the new builds, these are never included in the model for the first estimate, so November 2020 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.

As per our usual revisions policy, the figures for all months are first estimates and are subject to revision in subsequent periods.

The ONS has released a public statement on COVID-19 and the production of statistics. Specific queries must be directed to the Media Relations Office.

End of EU exit transition period

As the transition period ends and the UK enters into a new Trade and Cooperation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision makers have the data they need to be informed.

As the shape of the UK’s future statistical relationship with the EU becomes clearer over the coming period, the ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK’s well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available early this year.

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 standard average house price is calculated by taking the geometric mean price in January 2015 and then recalculating it in accordance with the index change back in time and forward to the present day.

The UK HPI applies a hedonic regression model that utilises the various sources of data on property price and attributes to produce up-to-date estimates of the change in house prices in each period.

Upcoming changes

A local authority geography change has been made in the November 2020 release (release date 20 January 2021). The change is in line with the updates given by ONS Geography. This includes that Aylesbury Vale (E07000004), Chiltern (E07000005), South Bucks (E07000006) and Wycombe (E07000007) will merge to create a new local authority ”Buckinghamshire" (E06000060).

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.

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8. Strengths and limitations

Extent of data coverage

The UK House Price Index (UK HPI) can provide a wide coverage of both cash and mortgage transactions and a large data source. Data are available at a local authority level as well as by property type, buyer status, funding statistics and property status.

Time lags

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. While changes to estimates are small at the headline level, these can be larger changes at lower geographies owing to fewer transactions being used. Caution is therefore advised when interpreting price changes in the most recent periods. Further information is provided in our revisions policy.

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Natalie Jones
hpi@ons.gov.uk
Ffôn: +44 (0)1633 456400