UK House Prices increase

ONS HPI

  

The ONS have just released their House Price Index for September 2015.

Main findings

-UK house prices increased by 6.1% in the year to September 2015, up from 5.5% in the year to August 2015.

-House price annual inflation was 6.4% in England, 1.1% in Wales, 1.1% in Scotland and 10.2% in Northern Ireland.

- Annual house price increases in England were driven by an annual increase in the East (8.4%) and the South East (7.4%).

- Excluding London and the South East, UK house prices increased by 5.0% in the 12 months to September 2015.

- On a seasonally adjusted basis, average house prices increased by 0.8% between August and September 2015.

- In September 2015, prices paid by first-time buyers were 4.3% higher on average than in September 2014.

- For owner-occupiers (existing owners), prices increased 6.9% for the same period.


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House price index by region


The pace of annual house price growth was again varied across the 9 English regions in September 2015 (Figure 5). The largest annual increase was in the East at 8.4% (down from 8.8% in the year to August 2015) followed by the South East (7.4% increase in the year to September 2015, unchanged from August).

The North East had the lowest annual growth of the 9 regions, with prices increasing 1.8% in the year to September 2015 (down from 3.2%). London prices increased by 7.2% over the year to September 2015 (up from 5.4% in the year to August 2015). Excluding London and the South East, UK house prices increased by 5.0% over the year to September 2015, up from 4.8% in the year to August 2015.

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While the supply of housing remains tight, demand continues to grow. The Bank of England’s November Inflation Report stated that housing demand remains strong, which should be reflected in an increase in mortgage approvals. Indeed, the volume of mortgage approvals grew by 3.9% in Q3 2015 to reach its highest level since the first quarter of 2014. Mirroring this increase in demand, UK home sales continued to pick-up despite the shortage of supply, and in the three months to September (Jul-Sep) were 4.4% higher than in the preceding three months (Apr-Jun).

Broader economic indicators suggest that the economy has continued to grow relatively strongly over recent periods, with output now increasing at a rate similar to its pre-downturn trend. Labour market conditions have continued to strengthen, as unemployment fell to 5.3% for July to September 2015 and annual regular pay grew by 2.5%. These improvements, along with a resurgence in job-to job moves and broader evidence of tightening, suggest that confidence in labour market outcomes remains high. However, despite the strengthening in nominal pay growth over the past year and low inflation, house price growth continues to outpace real earnings growth.

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No easing in supply constraint
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