House Price Index September 2006

Published	13 November 2006

The mix-adjusted average house price in the UK in September 2006 stood at £198,552, up from £197,009 in August 2006 (not seasonally adjusted).

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The mix-adjusted average house price in the UK in September 2006 stood at £198,552, up from £197,009 in August 2006 (not seasonally adjusted).
UK annual house price inflation in September 2006 was 8.0 per cent, up from 7.4 per cent in August 2006. Annual house price inflation in London was 9.0 per cent in September 2006, up from 7.6 per cent in August 2006.
The UK annual house price inflation rate for the 3 months to September 2006 was 7.1 per cent, and 7.8 per cent in London.

		UK		London		UK
		All dwellings		All dwellings		All dwellings
		Index Feb 02 = 100	% change over 12 months	Index Feb 02 = 100	% change over 12 months	£
		Not seasonally adjusted
2006	Apr	157.6	5.0	140.0	6.7	188,095
	May	159.3	5.7	141.0	7.1	190,211
	Jun	160.0	5.3	140.8	5.5	191,016
	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

HOUSE PRICE INFLATION: REGIONAL

The UK house price inflation rate rose from 7.4 per cent in August 2006 to 8.0 per cent in September 2006. Prices rose by 0.8 per cent between August and September, compared with a smaller rise of 0.2 per cent over the same period last year.

The rise in UK prices between August and September can be attributed to rises in average prices for all dwellings; for terraced houses and flats (both 1.3 per cent), bungalows (0.9 per cent), detached houses (0.4 per cent) and semi detached houses (0.2 per cent).

In the home countries in September, England, Scotland and Wales saw increases in inflation, while inflation fell in Northern Ireland. The inflation rate in England rose from 6.6 per cent in August to 7.2 per cent in September; the inflation rate in Scotland rose from 12.7 per cent to 12.9 per cent; in Wales the rate rose from 7.0 per cent to 10.3 per cent. In Northern Ireland the rate fell from 26.6 per cent to 23.6 per cent.

House price inflation rose in seven of the English regions and fell in the East and South East. The highest inflation rate was in London (9.0 per cent) followed by Yorkshire and the Humber (8.9 per cent), North East and South West (both 7.9 per cent), North West (7.8 per cent) and the West Midlands (7.1 per cent). Inflation rates were lower in the South East (5.9 per cent) and East (5.8 per cent). The lowest inflation rate was in the East Midlands (5.1 per cent).

HOUSE PRICES: REGIONAL

Mix-adjusted average house prices in September were £206,431 in England, £160,556 in Wales, £145,653 in Scotland and £168,805 in Northern Ireland.

The English region with the highest average house price in September remains London at £289,901. The lowest average price was in the North East at £142,208.

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 6.8 per cent in August to 7.7 per cent in September. There was a rise of 0.3 per cent in prices between August and September in the properties bought by first time buyers compared with a fall of 0.5 per cent over the same period last year.

The inflation rate for former owner occupiers rose from 7.6 per cent in August to 8.0 per cent in September. This was due to a rise of 0.9 per cent in prices between August and September in the properties bought by former owner occupiers compared with a smaller rise of 0.5 per cent over the same period last year.

The average price paid by first time buyers across the whole of the UK was £152,633 in September, while the average price paid by former owner occupiers was £218,139.

TABLES

Tables are from April 2004 to September 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 July and August 2006. This is largely the result of a small number of lenders supplying data quarterly. This means that previously published July and August 2006 figures have been revised downwards. Overall, the difference in the published prices is - £181 (- 0.1%) for July and - £622 (- 0.3%) for August. 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 September, say, is effectively the change in the average price from September 2005 to January 2006 (using last year's weights) combined with the change in the average price from January 2006 to September 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 Department 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 Department is more influenced by the market for the higher priced properties (i.e. the demand for detached houses).

5. Note that the Department's house price index figures released in this issue are based on completions during the month of September. Other recent indicators have been based on asking prices in October or prices based on mortgages approved during October. Therefore the Department's figures are not directly comparable with these other indicators.

6. A month on month comparison of the Department's 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 the Communities web site in Live tables - Housing Market section, tables 507 and 508 and tables 590 to 594.

9. The next three release dates are: