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Home»Mortgage»ONS House Price Index: UK inflation falls again amid mortgage uncertainty
Mortgage

ONS House Price Index: UK inflation falls again amid mortgage uncertainty

March 20, 20244 Mins Read


UK house prices continued to remain down against the year in January, the latest Office for National Statistics (ONS) House Price Index has shown.

The average property price of £281,913 was 0.6% (£2,000) down compared to January 2023, according to the ONS’s provisional estimates. However, annual house price deflation has slowed from a rate of 2.2%, with prices climbing 0.5% month-on-month (1.1% on a seasonally-adjusted basis).

Prices in England led the decline, falling 1.5% annually with property in London seeing an average fall of 3.9%. They grew 4.8% in Scotland, with Welsh prices dipping 0.8%.

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The ONS index is arguably the most comprehensive measure of UK house prices as it is based on final sale figures compiled by HM Land Registry. But its limitation is that it has a greater time lag than other HPIs, such as those produced by RICS and Rightmove. As well as being published two months after the data period, the prices it records may have been agreed several months before the sale was formally registered.

It comes after house prices fell 1.4% over the course of 2023, as headline CPI inflation remained stubbornly high and interest rates climbed to 15-year highs. In turn, this contributed to a spike in mortgage rates last year. Fresh uncertainty has seen mortgage pricing increase again since February, although the latest ONS data does not reflect this change.

Monthly house prices picture ‘beginning to diverge’ from annual figures

The latest ONS figures show house prices are down compared to 12-months previously. But the monthly figures suggest a recovery is underway in most parts of the UK.

For example, while average prices in the East of England dropped 2.2% year-on-year to £336,502, this figure was 1.2% up month-on-month. The only regions to buck this trend were the East Midlands, North East, North West and Yorkshire and the Humber, where prices all fell compared to December 2023. Wales recorded declines on both an annual (-0.8%) and monthly (-0.1%) basis.