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Statistical Release: House Price Index - December 2007

Published 11 February 2008

Download this release as a PDF: House Price Index - December 2007 (PDF, 70 kb, 9 pages)

  • The mix-adjusted average house price in the UK in December 2007 stood at £219,591, up from £218,662 in November 2007 (not seasonally adjusted).
  • UK annual house price inflation in December 2007 was 9.1 per cent, down from 9.7 per cent in November 2007. Annual house price inflation in London was 13.5 per cent in December, down from 14.5 per cent in November. This is the second consecutive month that the annual house price inflation rate has fallen.
  • The UK annual house price inflation rate for the 3 months to December was 10.0 per cent and 15.2 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
 Not seasonally adjusted  Index
Feb 02 = 100
% change over 12 months  Index Feb
02 = 100
  % change
over 12 months
 £
           
 2007 Jul  182.8  12.3  171.1  18.8  218,288
 Aug  183.7  11.3  168.9  17.2  219,369
 Sep  184.3  10.8  170.6  16.5  220,111
 Oct  184.4  11.3  171.0  17.6  220,291
 Nov  183.1  9.7  168.0  14.5  218,662
 Dec  183.9  9.1  169.7  13.5  219,591


House Price Inflation: Regional

The UK house price inflation rate fell from 9.7 per cent in November 2007 to 9.1 per cent in December 2007. Between November and December there was a rise of 0.4 per cent in the prices index of properties bought compared with a larger rise of 0.9 per cent over the same period last year resulting in a decrease 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 increases in average prices for detached houses (1.0 per cent), terraced houses (0.6 per cent), flats (0.5 per cent) and semi-detached houses (0.2 per cent). It is partly offset by a fall in the price of bungalows (2.3 per cent).

England, Scotland and Northern Ireland saw decreases in house price inflation in December 2007. In England annual house price inflation fell from 9.3 per cent in November to 9.0 per cent in December; In Scotland annual house price inflation fell from 14.1 per cent in November to 10.8 per cent in December; In Northern Ireland annual house price inflation fell from 17.4 per cent in November to 12.0 per cent in December. Wales, though, saw an increase in house price inflation from 6.0 per cent in November to 6.1 per cent in December.

House price inflation fell in five of the English regions and rose in the other four regions.

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

Figure 3: Regional house price indices

The highest inflation rate was in London (13.5 percent) followed by the South East (11.0 per cent), and the East (8.4 per cent). Inflation rates were lower in the South West (8.0 per cent), East Midlands (7.4 per cent) and the North West (6.7 per cent). The lowest inflation rates were in Yorkshire and the Humber (5.8 per cent), the North East (4.4 per cent) and the West Midlands (4.0 per cent).

House Prices: Regional

Mix-adjusted average house prices in December were £227,765 in England, £167,739 in Wales, £163,206 in Scotland and £219,698 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 £340,631. The lowest average price was in the North East at £151,085. 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 9.8 per cent in November to 9.5 per cent in December. There was a rise of 0.5 per cent in the prices index between November and December in the properties bought by first time buyers compared with a larger rise of 0.8 per cent over the same period last year.

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

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

The inflation rate for former owner occupiers fell from 9.7 per cent in November to 9.0 per cent in December. There was a rise of 0.4 per cent in the prices index between November and December in the properties bought by former owner occupiers, compared with a rise of 1.0 per cent over the sameperiod last year.

The average price paid by first time buyers across the whole of the UK was £166,734 in December, while the average price paid by former owner occupiers was £245,522.

Tables

Tables are from June 2005 to December 2007.

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 December, say, is effectively the change in the average price from December 2006 to January 2007 (using the weights for 2006) combined with the change in the average price from January 2007 to December 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 (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 December or prices based on mortgages approved during December. 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:

  • Tuesday 11 March 2008
  • Tuesday 15 April 2008
  • Tuesday 13 May 2008.

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