UK House Price Index: March 2016

UK house prices increased by 9.0% in the year to March 2016, up from 7.6% in the year to February 2016.

House price annual inflation was 10.1% in England, 2.1% in Wales, -6.1% in Scotland and 6.4% in Northern Ireland.

Annual house price increases in England were driven by an annual increase in London (13.0%), the South East (12.2%) and the East of England (12.1%).

Excluding London and the South East, UK house prices increased by 5.9% in the 12 months to March 2016.

On a seasonally adjusted basis, average house prices increased by 2.5% between February 2016 and March 2016.

In March 2016, prices paid by first-time buyers were 9.7% higher on average than in March 2015.

For owner-occupiers (existing owners), prices increased by 8.7% for the same period.

UK average mix-adjusted house price in March 2016 was £292,000.

This is the final release of the ONS House Price Index (HPI) which will be replaced by the new UK House Price Index from June 2016.

Further to previous announcements, a new UK House Price Index (HPI) will be published on 14 June that replaces this version of the HPI. The new UK HPI will be published on the GOV.UK website although a high-level summary and links to the new UK HPI will be published on the ONS website. For further detail and support in accessing the new UK HPI, please contact hpi@ons.gsi,gov.uk.

The Office for National Statistics (ONS) House Price Index (HPI), previously published by the Department for Communities and Local Government (DCLG), is a monthly release that publishes figures for mix-adjusted average house prices and house price indices for the UK, its component countries and regions.

The index is calculated using mortgage financed transactions that are collected via the regulated mortgage survey by the Council of Mortgage Lenders. These cover the majority of mortgage lenders in the UK. The HPI complements other measures of inflation published by us such as the consumer price indices, the producer price indices and the services producer price indices.

This statistical bulletin provides comprehensive information on the change in house prices on a monthly and annual basis. It also includes analysis by country, region, type of buyer (first-time buyers and former owner-occupiers) and type of dwelling (new dwelling or pre-owned dwelling). Historical series for all accompanying tables that transferred from DCLG are also available in the data section of this release.

The figures published in this release are not seasonally adjusted unless otherwise stated.

UK average house prices increased by 9.0% over the year to March 2016, up from 7.6% in the year to February 2016 (Figure 1). The average UK mix-adjusted house price in March 2016 was £292,000.

In March 2016, the UK mix-adjusted house price index increased by 2.9% on February 2016 to reach a record high of 228.6 (Figure 2). The UK index is 23.2% higher than the pre-economic downturn peak of 185.5 in January 2008.

On a seasonally adjusted basis, average house prices increased by 2.5% between February 2016 and March 2016, compared with an increase of 1.2% in average prices during the same period a year earlier.

During the year to March 2016, average house prices increased by 10.1% in England (up from 8.2% in the year to February 2016), 2.1% in Wales (down from 3.4%) and 6.4% in Northern Ireland (up from 3.6%). There was a 6.1% decrease in average house prices in Scotland (compared with a 0.1% decrease in the year to February 2016).

From 1 April 2015, UK stamp duty was replaced by land and buildings transactions tax in Scotland which, coupled with a significant increase in sales (a large proportion of which being high value properties) during March 2015, resulted in an annual increase of 14.6% in the year to March 2015. Despite Scotland seeing a small increase of 1.1% between February and March 2016, when comparing to the unusually high prices of March 2015 it results in an annual decrease of 6.1%.

The main movements for each country are:

• the index for England in March 2016 was at a record high (227.8) - this is 3.1% higher than in February 2016 (221.0) (Figure 4) and is 26.0% higher than the pre-economic downturn peak in January 2008 (180.8)

• the index for Wales in March 2016 was at a record high (227.7) – this is 0.7% higher than in February 2016 (226.1) and is 2.5% higher than the pre-economic downturn peak of January 2008 (222.1)

• the index for Scotland in March 2016 (228.5) is 6.1% below the record level witnessed in March 2015 (243.2) – Scotland prices are now 0.9% below the pre-economic downturn peak of June 2008 (230.6)

• the index for Northern Ireland in March 2016 (162.5) is 42.3% below the peak of August 2007 (281.5)

The pace of annual house price growth was again varied across the 9 English regions in March 2016 (Figure 5). The largest annual increase was in London at 13.0% (up from 9.3% in the year to February 2016), followed by the South East (12.2% increase in the year to March 2016, up from 11.1% in the year to February 2016). The North East continues to have the lowest annual growth of the 9 regions, with no change in prices in the year to March 2016 (down from a 1.9% increase in the year to February 2016).

Excluding London and the South East, UK house prices increased by 5.9% over the year to March 2016, up from 5.4% in the year to February 2016.

The increased growth seen in some regions may be as a response to new stamp duty rates for buy-to-let properties and second homes coming into effect on 1 April 2016.

This month, average house prices in 7 of the 9 English regions are at record levels (Figure 6). The North East is the only English region yet to surpass its pre-economic downturn peak (prices in the North East remain 3.5% below the peak of January 2008).

The main regional price index movements for March 2016 are:

• the price index for London reached a record high of 273.6 in March 2016 – this is up 2.2% on the previous record in January 2016 (267.6) and is 56.8% higher than the pre-economic downturn of January 2008 (174.5)

• the price index for the South East reached a record high of 214.6 in March 2016 – this is up 1.7% on the previous record in January 2016 (211.0) and is 28.9% higher than the pre-economic downturn of January 2008 (166.5)

• the price index for the East of England reached a record high of 216.8 in March 2016 – this is up 2.0% on the previous record in February 2016 (212.6) and is 28.7% higher than the pre-economic downturn of January 2008 (168.4)

• the price index for the South West reached a record high of 205.2 in March 2016 – this is up 2.6% on the previous record in February 2016 (200.0) and is 14.1% higher than the pre-economic downturn of January 2008 (179.9)

• the price index for the East Midlands reached a record high of 209.6 in March 2016 – this is up 0.8% on the previous record in January 2016 (208.1) and is 8.3% higher than the pre-economic downturn of January 2008 (193.5)

• the price index for Yorkshire and The Humber reached a record high of 219.0 in March 2016 – this is up 0.1% on the previous record in August 2015 (218.8) and is 1.6% higher than the pre-economic downturn of January 2008 (215.6)

• the price index for the North West reached a record high of 216.2 in March 2016 – this is up slightly on the previous record in August 2015 (216.1) and is 2.8% higher than the pre-economic downturn of January 2008 (210.4)

Average mix-adjusted house prices in March 2016 stood at £307,000 in England, £176,000 in Wales, £193,000 in Scotland and £155,000 in Northern Ireland (Figure 7).

In March 2016, London continued to be the English region with the highest average house price at £552,000 and the North East had the lowest average house price at £158,000. London, the South East and the East of England all had prices higher than the UK average price of £292,000.

Excluding London and the South East, the average UK mix-adjusted house price was £221,000.

The average price for properties bought by first-time buyers increased by 9.7% over the year to March 2016, up from an increase of 7.7% in the year to February 2016 (Figure 8). In March 2016, the average price paid for a house by a first-time buyer was £220,000.

The average price for properties bought by former owner-occupiers (existing owners) increased by 8.7% in the year to March 2016, up from an increase of 7.6% in the year to February 2016. In March 2016, the average price paid for a house by a former owner-occupier was £345,000.

During the year to March 2016, prices paid for new dwellings increased by 8.1% on average, compared with an increase of 9.1% in the year to February 2016 (Figure 9). The average UK house price for new dwellings in March 2016 was £295,000.

During the year to March 2016, prices paid for pre-owned dwellings increased by 9.1% on average, compared with an increase of 7.5% in the year to February 2016. The average UK house price for pre-owned dwellings in March 2016 was £292,000.

A new UK House Price Index (HPI) will be published on 14 June that replaces this version of the HPI. The new UK HPI will be published on the GOV.UK website although a high-level summary and links to the new UK HPI will be published on the ONS website. The methodology for the new House Price Index (HPI) is presented in the article Development of a single Official House Price Index, published in February 2016.

Early historic estimates for the new official UK House Price Index were presented in the article Introducing the single official House Price Index, published in March 2016. The new UK HPI will be published in its entirety in June 2016 containing figures to April 2016 and then monthly thereafter, replacing the existing house price indices currently published by the Office for National Statistics and Land Registry for England and Wales.

For further information, please email: hpi@ons.gov.uk

UK house prices continued to grow robustly in the year to March 2016. House prices grew at a rate of 9.0% in the 12 months to March 2016, the highest rate since March 2015 and an increase of 1.4 percentage points compared with February 2016. On a monthly (seasonally adjusted) basis, prices increased by 2.5% between February and March 2016, the highest increase since April 2004. House prices have now been growing since early 2012 and in March 2016 were 27.7% higher than their average level in 2007, before the economic downturn.

The increase in the 12-month rate in March was prominent in London, where prices increased by 13.0%, up from 9.3% in February 2016, and Northern Ireland, where prices increased by 6.4%, up from 3.6% in February. Higher rates of Stamp Duty Land Tax for additional properties introduced in England, Wales and Northern Ireland at the start of April 2016 is likely to have increased demand and possibly prices in the immediate run up to this change. In Scotland, new Land and Buildings Transactions Tax rates were introduced in April 2015, and in March 2015, annual house price inflation increased markedly to 14.6%. The effects of this have now unwound in the March 2016 rate, with house prices falling 6.1% compared with March 2015.

The continuing upward price pressures in the housing market may be a result of a robust demand outpacing supply: a view supported by a number of house market indicators. The volume of mortgage approvals - a leading indicator of housing purchases - grew by 19.5% in the year to March 2016. The number of UK home sales also continued to grow in the 3 months to March 2016 (Jan to Mar): rising by 19.9% relative to the preceding 3 months (Oct to Dec 2015). Data from the Royal Institution of Chartered Surveyors (RICS) also suggests buyer demand increased in 13 successive months to February 2016, with both demand and supply easing in March 2016.

On the supply side, the Bank of England’s Agents’ Summary of Business Conditions for February 2016 reported that housing activity remained subdued relative to pre-downturn levels and that market activity has been constrained by a shortage of properties for sale, a view corroborated by RICS. However, the latest ONS Output in the Construction Industry release indicated that new-build housing output increased by 3.4% in the previous 3 months (Jan to Mar) compared with the same period a year earlier.

Broader economic indicators suggest that the economy has continued to grow relatively strongly over recent periods, with output increasing by 0.4% in the first quarter (Jan to Mar) of 2016, a slightly slower rate than in Quarter 4 (Oct to Dec) 2015. Labour market conditions have continued to strengthen, as unemployment fell to 5.1% for the 3 months to March 2016: the lowest rate since the 3 months to October 2005. Annual pay growth also strengthened in 2015 compared with 2014, although the rate of this growth has eased in recent months. These improvements, along with falls in the inactivity rate and relative stability in recent months, suggest confidence in labour market outcomes remains high However, house price growth continues to outpace real earnings growth considerably, despite the improvements in nominal pay growth over the past year and low inflation.

The HPI monthly and quarterly datasets provide full historical series for the monthly tables accompanying the house price index statistical bulletin. This month, Tables 1 to 9 have been updated with the latest monthly estimates for March 2016. The seasonally adjusted figures in Table 7 have been revised this month as scheduled. This month, Tables 10 to 19 have been updated with the latest data for the first quarter (January to March) of 2016.

The HPI annual dataset contains all the annual live tables. No annual tables have been updated this month. The next set of updates to annual tables will be in July 2016.

The HPI weights summary datasets provide a summary of the aggregated mix-adjustment weights used in the production of the HPI for the period 2007 to 2016. The mix-adjustment weights are updated in the February HPI each year.

We would welcome your views on the data presented in this statistical bulletin. Please contact the house price index team using the email address below to discuss any aspect of the data, including your views on how we can improve the data.

hpi@ons.gov.uk