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UK house prices surge by 7.9% in the year to January 2016, up from 6.7% in the year to December 2015.



The average price of property coming up for sale has broken through the £300,000 mark for the first time this month.

In the South West, the average price stands at £292,251 - an annual increase of 6.8%.


Today's asking prices are now more than 50% higher than they were ten years ago, which highlights the growing affordability problem facing first-time buyers and trader-uppers.

Despite the recession, which saw several years of falling or stagnant property prices, the strength of the recovery is demonstrated by today's £303,190 average asking price, which is £100,000 higher than the £200,980 of March 2006.

By contrast, average wage growth of 22% over the past decade has failed to keep pace with CPI inflation of 26.8%, which highlights the issues of raising a deposit and affording a mortgage.


Main findings


UK house prices increased by 7.9% in the year to January 2016, up from 6.7% in the year to December 2015.

House price annual inflation was 8.6% in England, -0.3% in Wales, 0.1% in Scotland and 0.8% in Northern Ireland.

Annual house price increases in England were driven by an annual increase in the South East (11.7%), London (10.8%) and the East (9.8%).

Excluding London and the South East, UK house prices increased by 5.1% in the 12 months to January 2016.

On a seasonally adjusted basis, average house prices increased by 0.9% between December 2015 and January 2016.

In January 2016, prices paid by first-time buyers were 7.7% higher on average than in January 2015.

For owner-occupiers (existing owners), prices increased by 8.0% for the same period.

UK average mix-adjusted house price in January 2016 was £292,000.

2.About this statistical bulletin

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.

3.House price index UK summary

UK average house prices increased by 7.9% over the year to January 2016, up from 6.7% in the year to December 2015 (Figure 1). The average UK mix-adjusted house price in January 2016 was £292,000

.

Figure 1: Annual house price rates of change, UK all dwellings from January 2004 to January 2016



In January 2016, the UK mix-adjusted house price index increased by 1.4% on December 2015, to a record level of 223.9 (Figure 2). The UK index is 20.7% higher than the pre-economic downturn peak of 185.5 in January 2008.

Figure 2: Index values, UK all dwellings from January 2004 to January 2016

Index values February 2002=100



On a seasonally adjusted basis, average house prices increased by 0.9% between December 2015 and January 2016, compared with a decrease of 0.3% in average prices during the same period a year earlier

Table A: house price index - summary of UK all dwellings, January 2016

House price index: UK all dwellings
IndexPercentage 12 month changeIndexPercentage monthly change£
NSANSASASANSA
2013Sep185.03.8183.70.3245,130
Oct186.45.5186.61.7246,963
Nov187.25.4187.70.6248,083
Dec188.55.5189.60.9249,792
2014Jan191.36.8191.11.0251,935
Feb192.29.2194.81.8253,099
Mar191.48.0193.6-0.8252,019
Apr197.59.9198.02.3260,033
May198.910.4199.60.8261,935
Jun201.210.2200.30.3264,889
Jul206.211.5203.21.2271,568
Aug207.711.7204.70.7273,552
Sep207.312.1205.50.4272,952
Oct205.810.4205.70.1271,014
Nov205.79.9206.00.1270,901
Dec206.99.8207.70.8272,468
2015Jan207.48.4207.3R-0.3R270,057
Feb206.57.4209.0R0.8R268,830
Mar209.79.6211.9R1.4R273,035
Apr208.65.6209.2R-1.3R271,626
May210.05.6211.0R0.9R273,503
Jun212.65.7212.4R0.6R276,864
Jul217.05.2214.3R0.9R282,526
Aug219.25.5216.3R1.0R285,431
Sep219.86.1218.2R0.9R286,261
Oct219.86.8219.7R0.7R286,260
Nov221.67.7221.9R1.0R288,517
Dec220.86.7221.9R0.0R287,560
2016Jan223.97.9223.80.9291,504
Source - Regulated Mortgage Survey

1. Average house prices are not comparable between years as they reflect a different mix of houses being transacted. Indices have been chain linked so they are comparable year-on-year. For more information please see the re-weighting section in the background notes.
2. NSA: Not seasonally adjusted
3. SA: Seasonally adjusted
4. R: Data revised
5. Index - February 2002 = 100

4.House price index by country


During the year to January 2016, average house prices increased by 8.6% in England (up from 7.3% in the year to December 2015), 0.1% in Scotland (up from -0.2%) and 0.8% in Northern Ireland (down from 1.5%). There was a 0.3% decrease in average house prices in Wales (down from a 1.0% increase in the year to December 2015).

The main movements for each country are:
  • the index for England in January 2016 (222.8) is 1.4% higher than in December 2015 (219.6) (Figure 4) and is 23.2% higher than the pre-economic downturn peak in January 2008 (180.8)
  • the index for Wales in January 2016 was 224.0 – this is 0.4% below the previous record level witnessed in December 2015 (225.0) and is 0.9% higher than the pre-economic downturn peak of January 2008 (222.1)
  • the index for Scotland in January 2016 (229.5) is 5.6% below the record level witnessed in March 2015 (243.2) – Scotland prices are now 0.5% below the pre-economic downturn peak of June 2008 (230.6)
  • the index for Northern Ireland in January 2016 (160.7) is 42.9% below the peak of August 2007 (281.5)

5.House price index by region

The pace of annual house price growth was again varied across the 9 English regions in January 2016 (Figure 5). The largest annual increase was in the South East at 11.7% (up from 8.8% in the year to December 2015) followed by London (10.8% increase in the year to January 2016, up from 9.4% in the year to December 2015). The North East continues to have the lowest annual growth of the 9 regions, with prices increasing 0.9% in the year to January 2016 (unchanged from 0.9% in the year to December 2015).
Excluding London and the South East, UK house prices increased by 5.1% over the year to January 2016, up from 4.6% in the year to December 2015.
This month, average house prices in only 3 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 3.7% below the peak of January 2008).
The main regional price index movements for January 2016 are:
  • the price index for London reached a record level of 267.6 in January 2016 – this is up 2.4% from the previous record in November 2015 (261.3) and 53.4% higher than the pre-economic downturn peak in January 2008 (174.5)
  • the price index for the South East reached a record level of 211.1 in January 2016 – this is up 2.5% from the previous record in December 2015 (205.9) and 26.8% higher than the pre-economic downturn peak of January 2008 (166.5)
  • the price index for the East reached a record level of 209.1 in January 2016 – this is up 0.2% from the previous record in December 2015 (208.6) and 24.2% higher than the pre-economic downturn peak of January 2008 (168.4)
  • the 6 remaining regions fell back from the record levels witnessed in previous months, the most notable being in Yorkshire and The Humber, where the index level fell by 0.8% to 213.2 in January 2016 (down from 215.0 in December 2015) and the West midlands, which fell by 0.5% to 195.6 (down from 196.5 in December 2015)
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6.Average house prices in countries and regions

Average mix-adjusted house prices in January 2016 stood at a record high of £306,000 in England, £174,000 in Wales, £195,000 in Scotland and £153,000 in Northern Ireland (Figure 7).
In January 2016, London continued to be the English region with the highest average house price at a record high of £551,000 and the North East had the lowest average house price at £156,000. London, the South East and the East all had prices higher than the UK average price of £292,000.
Excluding London and the South East, the average UK mix-adjusted house price was £218,000.
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7.House price index by type of buyer

The average price for properties bought by first-time buyers increased by 7.7% over the year to January 2016, up from an increase of 6.4% in the year to December 2015 (Figure 8). In January 2016, the average price paid for a house by a first-time buyer was £222,000.
The average price for properties bought by former owner-occupiers (existing owners) increased by 8.0% in the year to January 2016, up from an increase of 6.9% in the year to December 2015. In January 2016, the average price paid for a house by a former owner-occupier was £340,000.
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8.House price index by new and pre-owned dwellings

During the year to January 2016, prices paid for new dwellings increased by 8.3% on average, compared with an increase of 7.0% in the year to December 2015 (Figure 9). The average UK house price for new dwellings in January 2016 was £282,000.
During the year to January 2016, prices paid for pre-owned dwellings increased by 7.9% on average, compared with an increase of 6.7% in the year to December 2015. The average UK house price for pre-owned dwellings in January 2016 was £292,000.
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9.Development of a single, official house price index - progress updates

The methodology for the new house price index (HPI) has now been finalised and is presented in the article Development of a single official house price index, published in February 2016. Details on the transition plan to move to the next phase of development can also be found in the February 2016 article.
For further information, please email: hpi@ons.gsi.gov.uk
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10.Introducing the new single Official House Price Index: user event

This user event follows the October 2014 consultation on the development of a single Official House Price Index and subsequent published responses to provide final details on the methodology being used in the development of the new, single official house price index (HPI). During this event, an historic time series for the new single Official HPI will be presented, comparing these new estimates with existing estimates of average house prices and house price growth. Scheduled to be first published in their entirety in June 2016, these new statistics will replace the existing indices published separately by ONS and Land Registry.
The single Official House Price Index user event will be held in London.
Date: Wednesday 30 March 2016
Venue: Harvey Goodwin Suite, Church House Westminster, Deans Yard, Westminster, SW1P 3NZ
Time: 11.00am to 1.00pm

Details:

Exact timings and content for the event are to be agreed; however, the event will cover the following topics and allow time for general discussion regarding the introduction of the new Official House Price Index and a question and answer session:
  1. Overview of the new HPI development and methodological changes
  2. Impact of changes – comparisons against existing house price measures
  3. Next steps: User transition to the single Official House Price Index
The event is free of charge although spaces are limited and will be allocated on a first come first served basis. To reserve your place, please email:hpi@ons.gsi.gov.uk with the following details for each attendee: Name, organisation (if applicable), contact details (email address and contact number).

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