UK residential property prices still rising, according to figures from govt department

The latest property price index from the UK government shows that values were still rising in May and suggest the market, although slowing, is doing better than other reports suggest.

The UK house price index produced by the department of Communities and Local Government includes data based on mortgage completions during the month of May 2010 and shows that prices increased 0.7% in May and are 11% higher than in the same month last year.
The mix-adjusted average house price in the UK stood at £209,505 in May 2010, the figures also show and on a quarterly basis they rose by 1.7% in the quarter compared with a rise of 2.9% for the quarter ending February 2010.
Overall annual average house prices rose 11.7% in England, 3.7% in Scotland and 10.9% in Wales but fell 1.1% in Northern Ireland. Annual average house prices paid by first time buyers in May 2010 were 11.6% higher than a year ago. Average house prices paid by former owner occupiers were 10.8% higher.
The report also shows that average house prices paid for new properties in May 2010 were 6.5% higher than a year ago while average house prices paid for pre-owned dwellings were 11.3% higher.
The index appears out of kilter with others published in recent days but this may be because each one is calculated on a different basis.
But the index does add to the uncertainty about the current state of the residential property market, according to Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors.
He pointed out that the 0.7% gain recorded in May on this series is stronger than the increase suggested by the Nationwide Building Society for the same month and contrasts with the declines reported by Halifax and the Land Registry. ‘This divergence in part reflects the fact that the indices are gathering price data at different points in the house purchase process. However, relatively low transaction volumes may also be adding to the volatility of the individual series,’ said Rubinsohn.
‘Notwithstanding this, the key indicators from the latest RICS Housing Market Survey all suggest the second half of the year will be softer in terms of pricing that the first half. New instructions are now outstripping buyer interest and this has been reflected in the RICS price expectations series turning negative,’ he explained.
‘The regional dimension is likely to remain significant, however. Price expectations are still positive in London, the South East, Scotland and the East Midlands but strongly negative in Wales, East Anglia and much of Northern England,’ he added.