Homeowners may be surprised to learn that their properties aren’t worth as much as they previously thought, after the Office for National Statistics (ONS) revises its January house prices.
Londoners will be especially surprised to find out that their property price has fallen by an average of £27,000 – much different to the previous figures released by the ONS.
It appears that the ONS massively overestimated the rate of house price growth, however, the Government department denies this suggestion and reports that it has merely updated its index.
House Prices Lower than Previously Thought After ONS Revises Figures
The original data, released last month, led homeowners to believe that property prices in London were rising by around £500 per day. However, it now seems that that was not the case.
The ONS claimed that the average price of a UK property soared by almost £4,000 in January to hit £291,500. However, the latest data shows that the average house price actually dropped by £1,700 at the start of the year.
A further decline of just over £2,000 in February puts the average house price at £283,700. This is the lowest figure recorded since July 2015.
Property owners in London will be surprised to know that the value of their homes has plunged.
In March, the ONS reported that the average London house price hit a record high of £551,000 in January. This was up £15,000 on December’s figure of £536,000, suggesting that the capital was powering ahead.
However, the latest figures dispel this data. The ONS now claims that the average London property in February was worth £524,000, down £12,000 on December and £27,000 lower than the figure reported for January.
In its new report, the ONS does not address the revisions directly, although it does say that London is one of the regions that has fallen back “from the record levels witnessed in previous months”.
When asked to explain the data, a spokesperson for the ONS explains that every January, the index weights are updated to ensure the index keeps up to date with changes in the types of properties being purchased, therefore reflecting the price of the average home.
They add: “In updating the weights for 2016, there have been small decreases in weight for London and the South East, with increases seen in other areas. This shift in weight towards areas with lower average prices has brought down the UK average.
“Similarly, there has been a shift in weight from existing owners and existing properties to first time buyers and new builds, which has also contributed to reducing the UK average.”
Regarding London, the spokesperson says that a decrease in the average price between January and February is not unusual: “Between 2008 and 2015, there have been seven falls in average price between January and February and one increase… So it seems this is a seasonal observation. This isn’t an effect isolated to London: seasonal falls between January and February can also be seen in the South East.”1
We will continue to keep you updated with changes in the property market at LandlordNews.co.uk.
1 http://www.theguardian.com/money/2016/apr/12/london-property-values-plummet-after-office-national-statistics-revises-figures