House Price Index August 2006

Published	9 October 2006

The mix-adjusted average house price in the UK in August 2006 stood at £197,631, up from £194,454 in July 2006 (not seasonally adjusted).

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The mix-adjusted average house price in the UK in August 2006 stood at £197,631, up from £194,454 in July 2006 (not seasonally adjusted).
UK annual house price inflation in August 2006 was 7.7 per cent, up from 6.0 per cent in July 2006. Annual house price inflation in London was 7.9 per cent in August 2006, up from 7.1 per cent in July 2006.
The UK annual house price inflation rate for the 3 months to August 2006 was 6.3 per cent, and 6.8 per cent in London.

Figure 1: UK annual house price inflation (all dwellings)

Fig 1

		UK		London		UK
		All dwellings		All dwellings		All dwellings
		Index	% change	Index	% change
		Feb 02=100	over 12 months	Feb 02=100	over 12 months
			Not seasonally	adjusted

2006	Mar	156.2	3.3	138.4	4.0	186,519
	April	157.6	5.0	140.0	6.7	188,095
	May	159.3	5.7	141.0	7.1	190,211
	June	160.0	5.3	140.8	5.5	191,016
	July	162.9	6.0	144.1	7.1	194,454
	Aug	165.6	7.7	144.6	7.9	197,631

HOUSE PRICE INFLATION: REGIONAL

The UK house price inflation rate rose from 6.0 per cent in July 2006 to 7.7 per cent in August 2006. Prices rose by 1.6 per cent between July and August, compared with almost no change over the same period last year.

The rise in UK prices between July and August can be attributed to rises in average prices for bungalows (5.1 per cent) detached houses (3.2 per cent), flats (1.6 per cent), and semi detached houses (1.0 per cent).

In the home countries in August, England, Scotland and Northern Ireland saw increases in inflation, while inflation fell in Wales. The inflation rate in England rose from 5.5 per cent in July to 7.0 per cent in August; the inflation rate in Scotland rose from 9.3 per cent to 12.8 per cent; in Northern Ireland the rate rose from 18.3 per cent to 25.9 per cent. In Wales the rate fell from 7.4 per cent to 7.1 per cent.

Figure 2: house price inflation by country 12-month percentage change

Fig 2

House price inflation rose in eight of the English regions and fell in Yorkshire and the Humber. The highest inflation rate was in London and the South West (both 7.9 per cent) followed by Yorkshire and the Humber (7.3 per cent), North East and South East (both 7.2 per cent), North West (7.0 per cent). Inflation rates were lower in East (6.4 per cent). Inflation rates were lowest in West Midlands (5.9 per cent) and East Midlands (4.4 per cent) respectively.

Figure 3: Regional house price indices 12-month percentage change for the latest month

Fig 3

HOUSE PRICES: REGIONAL

Mix-adjusted average house prices in August were £205,556 in England, £158,028 in Wales, £145,490 in Scotland and £166,398 in Northern Ireland.

The English region with the highest average house price in August remains London at £286,369. The lowest average price was in the North East at £142,901.

Only the East, London, South East and the South West had average prices above the UK average.

Figure 4: Mix-adjusted average house prices Not seasonally adjusted

Fig 4

HOUSE PRICE INFLATION: TYPE OF BUYER

The UK house price inflation rate for first time buyers rose from 5.6 per cent in July to 6.9 per cent in August. There was a rise of 1.3 per cent in prices between July and August in the properties bought by first time buyers, this was more than the rise of less than 0.1 per cent over the same period last year.

The inflation rate for former owner occupiers rose from 6.1 per cent in July to 8.0 per cent in August. This was due to a rise of 1.7 per cent in prices between July and August in the properties bought by former owner occupiers compared with a fall of less than 0.1 per cent over the same period last year.

The average price paid by first time buyers across the whole of the UK was £152,172 in August, while the average price paid by former owner occupiers was £217,021.

Figure 5: UK annual house price inflation by type of buyer 12-month percentage change

Fig 5

TABLES

Tables are from March 2004 to August 2006.

A1: Mix-adjusted house price index and annual inflation by region.
A2: Mix-adjusted average house prices by region.

A3: Mix-adjusted house price index and annual inflation by type of buyer, UK.
A4: Mix-adjusted average house prices by type of buyer, UK.

Additional tables and earlier monthly data can be accessed in the 'Live tables' section (housing market) at /housingstatistics

Notes to editors

1. The mix-adjusted house price series are produced by Communities and Local Government and are being published on an experimental basis. Development of the methodology underpinning the indices has been undertaken in conjunction with the Office for National Statistics. The index will undergo a quality audit during 2007 with a view to gaining accreditation as a 'National Statistic'.

2. Since September 2005 the new mix-adjusted house price index is based on an enlarged sample of completions data (about 50,000 per month) from about 50 mortgage lenders who supply data through the Regulated Mortgage Survey (RMS) of the Council of Mortgage Lenders (CML)/BankSearch. Prior to this date the index was based on the Survey of Mortgage Lenders (SML) (about 25,000 completions per month). The number of cases received will also be affected by the total number of mortgages that have been completed.

3. In January of each year the index weights are revised to reflect the pattern of property transactions during the previous 3 years. The mix-adjusted average prices for the rest of the year are then determined using these new weights. Consequently whilst house prices within the year are comparable - they are all based on the same weights - house prices between years cannot be compared because last year's weights and this year's weights are different. The index itself is constructed on a chain-linked basis, which enables year-on-year comparisons to be made. This means that the year-on-year change in the index for August, say, is effectively the change in the average price from August 2005 to January 2006 (using last year's weights) combined with the change in the average price from January 2006 to August 2006 using this year's weights. Therefore, the year-on-year change in the index is not the same as the year-on-year change in the mix-adjusted average price.

4. Communities and Local Government index is currently showing similar year-on-year inflation to other indices available from commercial sources. The slight difference will be affected by differences in weighting. Communities and Local Government uses expenditure weights, whereas other indices use transaction weights. Consequently, Communities and Local Government index is influenced by house price inflation rates in the higher priced areas (which are currently in the South) where house prices - and therefore total expenditure on house buying - is highest. Similarly, regional inflation determined by Communities and Local Government is more influenced by the market for the higher priced properties (i.e. the demand for detached houses).

5. Note that Communities and Local Government house price index figures released in this issue are based on completions during the month of August. Other recent indicators have been based on asking prices in September or prices based on mortgages approved during September. Therefore Communities and Local Government figures are not directly comparable with these other indicators.
6. A month on month comparison of Communities and Local Government index and price is not advised, as the series are not seasonally adjusted and comparisons over periods of less than a year will be affected by seasonal fluctuations. The series will not be seasonally adjusted until a sufficiently long series exists.

7. Further details on the methodology of the index can be found in the Publications section of Housing Statistics website, at /housingstatistics.

8. Further quarterly and annual house price data can be found on Communities and Local Government web site in Live tables - Housing Market section, tables 507 and 508 and tables 590 to 594.

9. The next three release dates are: