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Average UK house prices hits record high

The latest house price data, published by HM Land Registry for September 2021, shows that average house prices in the UK increased by 11.8% in the year to September 2021, up from 10.2% in the year to August 2021.

Because of the impact of the coronavirus (COVID-19) pandemic on both the number and supply of housing transactions, we might see larger revisions to the published House Price Index (HPI) estimates than usual. It is worth noting that the monthly property transactions statistics published by HM Revenue and Customs show that the number of transactions in September 2021 were higher than average. As fewer processed transactions are available than expected for the September 2021 estimate, the proportion of transactions used in the compilation of the UK HPI is lower than usual. As a result, there may be increased volatility in this month’s estimates, particularly at the lower geographical levels where transaction volumes are smaller. We are looking at options to improve this, including working with data suppliers. In particular, HM Land Registry is currently increasing the level of automation in the way they process applications. As a result of this process, initial data numbers may be slightly lower, however in the medium to long term this will lead to higher volumes.

Headline statistics:

  • UK average house prices increased by 11.8% over the year to September 2021, up from 10.2% in August.
  • The average UK house price was at a record high of £270,000 in September 2021, which is £28,000 higher than this time last year.
  • Average house prices increased over the year in England to £288,000 (11.5%), in Wales to £196,000 (15.4%), in Scotland to £180,000 (12.3%) and in Northern Ireland to £159,000 (10.7%).
  • London continues to be the region with the lowest annual growth (2.8%) for the tenth consecutive month.

Annual house price rates of change for all dwellings, UK: January 2006 to September 2021

The latter half of 2020 saw the UK’s average house price growth accelerating. This trend continued into 2021 as the UK average house price for September 2021 was a record high of £270,000, up from £263,000 in August 2021, and £6,000 higher than the previous record seen in June 2021.

On 8 July 2020, changes to the tax paid on property purchases were announced with immediate effect in England and Northern Ireland. Similar changes came into effect slightly later in Scotland and Wales (15 July and 27 July respectively). In England and Northern Ireland, properties up to the value of £500,000 would incur no tax, while the thresholds for Scotland and Wales were £250,000. These changes in the tax paid on housing transactions may have allowed sellers to request higher prices as the buyers’ overall costs are reduced.

On 3 March 2021, an extension to the Stamp Duty holiday in England and Northern Ireland was announced. This meant that the tax holiday was extended until 30 June 2021, after which the threshold decreased to £250,000 until 30 September 2021. From 1 October 2021, the Stamp Duty thresholds have reverted to what they were before 8 July 2020. The tax holiday for Scotland ended on 31 March 2021. The tax holiday in Wales ended on 30 June 2021.

As the tax breaks were originally due to conclude at the end of March 2021, it is likely that March’s average house prices were slightly inflated as buyers rushed to ensure their house purchases were scheduled to complete ahead of this deadline. This effect was then further exaggerated in June 2021, in line with the extension to the holiday on taxes paid on property purchases in England, Wales and Northern Ireland. Following a decrease in July, average house prices increased in the months of August and September 2021 and have now surpassed the peak seen in June. Monthly property transactions statistics published by HM Revenue and Customs show that the seasonally adjusted number of transactions in September 2021 (when the last of the tax holidays came to an end in England) increased to 160,950, which is 67.5% higher than August 2021, and 68.4% higher than a year earlier.

House prices by country

Average house price by country, UK: January 2005 to September 2021

  • England house prices remain the highest in the UK

House prices by region

  • London remains the region with the lowest annual house price growth

The North West was the region with the highest annual house price growth, with average prices increasing by 16.8% in the year to September 2021. This was up from 11.6% in August 2021.

The lowest annual growth was in London, where average prices increased by 2.8% over the year to September 2021, down from 6.7% in August 2021. This represents the lowest annual growth in London since July 2020.

Despite being the region with the lowest annual growth, London’s average house prices remain the most expensive of any region in the UK at an average of £507,000 in September 2021.

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