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• House Price Index - October 2007

House Price Index - October 2007

Download this release as a PDF: House Price Index - October 2007 (PDF, 68kb, 9 pages)

• The mix-adjusted average house price in the UK in October 2007 stood at
  £220,195, up from £220,111 in September 2007 (not seasonally adjusted).
• UK annual house price inflation in October 2007 was 11.3 per cent, up from 10.8
  per cent in September 2007. Annual house price inflation in London was 17.7 per
  cent in October, up from 16.5 per cent in September.
• The UK annual house price inflation rate for the 3 months to October was 11.1 per
  cent and 17.1 per cent in London.

 House Price Inflation: Regional

The UK house price inflation rate rose from 10.8 per cent in September 2007 to 11.3 per cent in October 2007. Between September and October there was a rise of less than 0.1 per cent in the prices index of properties bought compared with a fall of 0.4 per cent over the same period last year resulting in an increase in the inflation rate.

The small rise in UK prices between September and October can be attributed to increases in average prices for detached houses (0.8 per cent), semi-detached houses (0.2 per cent) and bungalows (0.1 per cent). It is partly offset by a fall in the price of terraced houses (0.4 per cent) and flats (0.7 per cent).

England, Scotland and Wales saw increases in house price inflation in October 2007. In England annual house price inflation increased from 10.1 per cent in September to 10.7 per cent in October. In Scotland house price inflation increased from 12.5 per cent in September to 13.9 per cent in October. In Wales house price inflation rose to 9.7 per cent in October from 6.2 per cent in September. Northern Ireland, though, saw a decrease in house price inflation from 42.7 in September to 32.5 per cent in October 2007.

House price inflation rose in six of the English regions and fell in three regions.

The highest inflation rate was in London (17.7 percent) followed by South East (11.7 per cent), and the South West (9.6 per cent). Inflation rates were lower in the East (9.3 per cent), Yorkshire and the Humber (7.3 per cent) and the North West (7.2 per cent). The lowest inflation rates were in the West Midlands (6.7 per cent), the East Midlands (6.4 per cent) and the North East (5.2 per cent).

 House Prices: Regional

Mix-adjusted average house prices in October were £227,619 in England, £170,923 in Wales, £164,960 in Scotland and £241,159 in Northern Ireland.

The English region with the highest average house price in October remains London at £343,444. The lowest average price was in the North East at £148,763.

Of the English regions, 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 fell from 11.8 per cent in September to 10.9 per cent in October. There was a fall of 0.4 per cent in the prices index between September and October in the properties bought by first time buyers compared with a rise of 0.4 per cent over the same period last year.

The inflation rate for former owner occupiers rose from 10.5 per cent in September to 11.4 per cent in October. There was a rise of 0.2 per cent in the prices index between September and October in the properties bought by former owner occupiers, compared with a fall of 0.6 per cent over the same period last year.

The average price paid by first time buyers across the whole of the UK was £166,764 in October, while the average price paid by former owner occupiers was £246,408.

Tables

Tables are from April 2005 to October 2007.

• A1: Mix-adjusted house price index and annual inflation by region (MS Excel, 46kb).
• A2: Mix-adjusted average house prices by region (MS Excel, 35kb).
• A3: Mix-adjusted house price index and annual inflation by type of buyer, UK (MS Excel, 31kb).
• A4: Mix-adjusted average house prices by type of buyer, UK (MS Excel, 27kb).

Additional tables and earlier monthly data can be accessed in the 'Live tables' section (housing market and house prices) at www.communities.gov.uk/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. In light of the recent Statistics and Registration Service Act 2007 we will seek advice from the new Statistics Board, at the most appropriate time, to gain accreditation for the index 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 60 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 October, say, is effectively the change in the average price from October 2006 to January 2007 (using the weights for 2006) combined with the change in the average price from January 2007 to October 2007 using the weights for 2007. 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 (i.e. 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 October. Other recent indicators have been based on asking prices in November or prices based on mortgages approved during November. 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 www.communities.gov.uk/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:

• Monday 14 January 2008
• Monday 11 February 2008
• Tuesday 11 March 2008

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