House Price Index - December 2006

Published	12 February 2007

The mix-adjusted average house price in the UK in December 2006 stood at £201,090, up from £199,238 in November 2006 (not seasonally adjusted).

Download this release as a PDF: House Price Index December 2006.

The mix-adjusted average house price in the UK in December 2006 stood at £201,090, up from £199,238 in November 2006 (not seasonally adjusted).
UK annual house price inflation in December 2006 was 9.9 per cent, up from 8.8 per cent in November 2006. Annual house price inflation in London was 11.8 per cent in December 2006, up from 9.9 per cent in November 2006.
The UK annual house price inflation rate for the 3 months to December 2006 was 9.1 per cent and 10.7 per cent in London.

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

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

		UK		London		UK
		All dwellings		All dwellings		All dwellings
		Index	Per cent change	Index	Per cent change	£
		Feb 02 = 100	over 12 months	Feb 02 months	over 12 months
		Not seasonally adjusted
2006	Jul	162.7	5.9	144.1	7.0	194,273
	Aug	165.0	7.4	144.1	7.6	197,009
	Sep	166.3	8.0	146.4	9.0	198,552
	Oct (R)	165.6	8.5	145.4	10.4	197,740
	Nov (R)	166.9	8.8	146.7	9.9	199,238
	Dec	168.5	9.9	149.5	11.8	201,090
(R) Revised

House Price Inflation: Regional

The UK house price inflation rate rose from 8.8 per cent in November 2006 to 9.9 per cent in December 2006. Between November and December there was a rise of 0.9 per cent in the prices of properties bought compared with a decrease of less than 0.1 per cent over the same period last year resulting in an increase in the inflation rate.

Figure 2: House price inflation by country

12-month percentage change

Figure 2: House price inflation by country

The rise in UK prices between November and December can be attributed to rises in average prices for flats (2.6 per cent), bungalows (2.2 per cent), semi-detached houses (1.6 per cent) and terraced houses (0.8 per cent). The price of detached houses fell slightly (0.8 per cent).

In the home countries in December, England, Scotland and Northern Ireland saw increases in inflation, while inflation fell in Wales. The inflation rate in England rose from 7.8 per cent in November to 8.9 per cent in December; the inflation rate in Scotland rose from 13.4 per cent to 15.2 per cent; in Northern Ireland the rate rose from 37.2 per cent to 39.9 per cent. In Wales the rate fell from 10.2 per cent to 9.1 per cent.

House price inflation rose in six of the English regions (North East, East Midlands, West Midlands, East, London and South East) and fell in two regions (North West and South West) and remained the same in one (Yorkshire and the Humber). The highest inflation rate was in London (11.8 percent) followed by the Yorkshire and the Humber (9.9 per cent), South East (8.7 per cent) and North East (8.4 per cent). Inflation rates were lower in the East (8.1 per cent), the West Midlands (7.8 per cent), South West (7.7 per cent) and North West (7.4 per cent). The lowest inflation rate was in the East Midlands (6.1 per cent).

Figure 3: Regional houe price indices

12-month percentage change for the latest month

House Prices: Regional

Mix-adjusted average house prices in December were £208,525 in England, £160,060 in Wales, £147,687 in Scotland and £191,505 in Northern Ireland.

Figure 4: Mix-adjusted average house prices

Not seasonally adjusted

Figure 4: Mix-adjusted average house prices

The English region with the highest average house price in December remains London at £296,160. The lowest average price was in the North East at £146,183.

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

House Price Inflation: Type of Buyer

The UK house price inflation rate for first time buyers rose from 8.9 per cent in November to 9.4 per cent in December. There was a rise of 0.8 per cent in prices between November and December in the properties bought by first time buyers compared with a rise of 0.3 per cent over the same period last year.

Figure 5: UK annual house price inflation by type of buyer

12-month percentage change

The inflation rate for former owner occupiers rose from 8.8 per cent in November to 10.0 per cent in December. There was a rise of 1.0 per cent in prices between November and December 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 £155,120 in December, while the average price paid by former owner occupiers was £220,699.

Tables

Tables are from June 2004 to December 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.

This month we received some additional data for October and November 2006. This is largely the result of a small number of lenders supplying data quarterly but also includes the late delivery of data. This means that previously published October and November 2006 figures have been revised downwards. Overall, the difference in the published prices is - £247 (- 0.1 per cent) for October and - £229 (- 0.1 per cent) for November. Larger revisions have occurred in some regions and in type of buyer prices. The change in prices is not an error but the result of an additional data.

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 December, say, is effectively the change in the average price from December 2005 to January 2006 (using last year's weights) combined with the change in the average price from January 2006 to December 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. The 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. The Communities and Local Government index uses expenditure weights, whereas other indices use transaction weights. Consequently, the 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 the Communities and Local Government is more influenced by the market for the higher priced properties (ie the demand for detached houses).

5. Note that the Communities and Local Government house price index figures released in this issue are based on completions during the month of December. Other recent indicators have been based on asking prices in January or prices based on mortgages approved during January. Therefore the Communities and Local Government figures are not directly comparable with these other indicators.

6. A month on month comparison of the 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 monthly 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 the 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: