UK House Price Index August 2022 Shows Big Increases But Market Slows

19th October 2022

UK average house prices increased by 13.6% over the year to August 2022, down from 16.0% in July 2022.

Despite UK house prices increasing between July and August 2022, annual growth has slowed because of the sharp rise in house prices in August 2021 following changes in the stamp duty holiday.

The average UK house price was £296,000 in August 2022, which is £36,000 higher than this time last year.

Average house prices increased over the year to £316,000 (14.3%) in England, to £220,000 in Wales (14.6%), to £195,000 in Scotland (9.7%) and to £169,000 in Northern Ireland (9.6%).

UK house prices
UK average house prices increased by 13.6% over the year to August 2022.

The latest house price data published on GOV.UK by HM Land Registry (HMLR) for August 2022 show that average house prices in the UK increased by 13.6% in the year to August 2022, down from 16.0% in the year to July 2022.

The coronavirus (COVID-19) pandemic affected the supply of housing transactions for a period of time. Therefore, while HMLR continue to process the backlog, revisions to the published UK House Price Index (HPI) estimates may be larger than usual. The total number of processed transactions feeding into this month's release (including those from previous months, which are incorporated in line with our revisions policy) has increased compared with the numbers seen throughout the coronavirus pandemic period. While this indicates an improvement in the quality of the UK HPI estimates going forward, it may also result in revisions to previous months that are higher than usual, as more transactions are now available in our calculations.

Consistent price increases since early 2022 have resulted in a record average house price level in the UK of £296,000 in August 2022. The annual growth rate for average UK house prices for August 2022 was 13.6%, compared with 16.0% in the year to July 2022 and 8.1% in the year to June 2022. This is driven by the volatility seen in house prices throughout 2021 because of Stamp Duty holiday changes. For example, tax holiday changes at the end of June 2021 caused average house prices to fall £13,000 in the month to July 2021, followed by an increase of £7,000 into August 2021. There was a smaller increase of £3,000 between July and August 2022. This base effect, where prices are increasing by a smaller amount than the same period last year, has led to the slowing of annual growth this month. Trends in 2022 have been more stable.

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 were 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 for Wales ended on 30 June 2021.

UK house prices experienced sharp, temporary rises in March 2021, June 2021 and September 2021. This corresponded with each of the original and extended end dates of the Stamp Duty holiday in UK nations. The final Stamp Duty holiday extension applied to England and concluded in September 2021. It is likely that average house prices were slightly inflated during these months as buyers rushed to complete their house purchases ahead of the Stamp Duty holiday deadlines.

The provisional seasonally adjusted estimate of UK residential transactions in August 2022 was 104,980, as shown in the Monthly property transactions statistics published by HM Revenue and Customs (HMRC). This is 7.6% higher than August 2021 and 1.1% higher than July 2022.

The average UK house price was £296,000 in August 2022; this is £36,000 higher than in August 2021.

On a non-seasonally adjusted basis, average house prices in the UK grew by 0.9% between July and August 2022. This compares with an increase of 3.0% during the same period a year earlier (July and August 2021).

On a seasonally adjusted basis, average house prices in the UK increased by 1.1% between July and August 2022, following an increase of 1.3% in the previous month. Prices increased by 3.3% between July and August 2021.

Note
For more details and charts go HERE