New ‘official’ UK House Price Index launched

The first new ‘official’ UK House Price Index, released this morning, shows an annual price increase of 8.2 per cent which takes the average property value in the UK to £209,054.

The data, which as in the case of the old Land Registry data will be historic, refers to April.

In England, the April data shows an annual price increase of 9.1 per cent which takes the average property value to £224,731. Monthly house prices rose by 0.7 per cent since March 2016.

Wales shows an annual price increase of 1.7 per cent which takes the average property value to £139,385. Monthly house prices fell by 1.9 per cent since March 2016.

London shows an annual price increase of 14.5 per cent which takes the average property value to £470,025. Monthly house prices rose by 0.6 per cent since March 2016.

London experienced the greatest increase in its average property value over the last 12 months with a movement of 14.5 per cent; the North West experienced the greatest monthly growth with an increase of 2.3 per cent; the North East saw the lowest annual price growth with an increase of 0.1 per cent; the South West saw the most significant monthly price fall with a fall of 2.8 per cent.

The number of UK home sales continued to grow in the three months to April 2016 (Feb-Apr) rising by 8.3 per cent relative to the preceding three months (Nov-Jan), although sales fell by 45.2 per cent in April 2016 compared with March 2016 - no doubt thanks to the passing of the stamp duty surcharge deadline.

Sales during February 2016, the most up-to-date figures available, show that the number of completed house sales in England increased by 1.1 per cent to 56,884 compared with 56,261 in February 2015 and the number of completed house sales in Wales increased by 4.1 per cent to 2,796 compared with 2,686 in February 2015.

The number of completed house sales in London fell by 10.5 per cent to 6,926 compared with 7,740 in February 2015.

The new house price index format includes breakdowns of first time buyers and new build homes and has been developed by Land Registry, Office for National Statistics, Registers of Scotland, Land & Property Services Northern Ireland, and the Valuations Office Agency.

The figures are ‘mix-adjusted’ to factor in the tendency for different property types to sell at different times of year. The price data will be calculated using a geometric average - roughly similar to a median.

The index will be published roughly mid-month in future - so the May data will be published on July 19, the June data on August 16, the July data on September 13, and so on.

Even ahead of its launch the new index attracted scepticism from at least one estate agent who believed it was to be a trojan horse to start the process of council tax revaluation.

Charles Curran, principal and data analyst Maskells Estate Agents, says the use of data from the Valuation Office, which has details of each property in the UK, means that in theory “the new index will make it possible to appraise every home in the country at the touch of a button.”

This would not have been possible under previous official indices and would instead have required expensive and politically-sensitive visits to individual homes.

“Council tax no longer has any link to the value of a property in real terms, particularly in London and the south east. Instead, the government relies on stamp duty to raise taxes on property, which is only paid if people move” says Curran.

“While the new index may be of little use, or interest to the market itself, we feel certain it will be of great use to government. Certainly this new index would allow local authorities the necessary data to consider revaluing council tax which would provide a more meaningful and sustainable revenue for cash strapped local authorities.”