Revised ONS figures show lower London property values

The Office for National Statistics (ONS) has revised down data from its January 2016 House Price Index, knocking up to £27k of property values, affecting mostly those in the south east of the country. Rather than a correction due to overestimating, the government department stated that the revision was had simply a factor of updating the house price index, to ensure its relevancy, reflecting changes in the types of houses being purchased. In effect, this data shows the average price of a home in London, however the ONS stated that it was normal for a decrease in house prices between January and February and that is not confined to London.

London homeowners are likely to be surprised to discover that their property has typically plummeted in value by £27,000 in a month - partly, it seems, because government statisticians overstated the strength of the housing market in January.



The Office for National Statistics has wiped thousands of pounds off the value of UK homes after carrying out a revision of its data.



At first glance it appears that the ONS massively overestimated the rate of house-price growth, but the government department rejects this suggestion, saying it has merely updated its house price index.



The original ONS data, issued last month, prompted the Guardian and other media outlets to report that property prices in London were increasing by almost £500 a day. It now appears this was not the case.



The revelation that the ONS has dramatically revised its numbers is discreetly tucked away in the department’s latest monthly house price index.



On 22 March the ONS reported that the price of an average UK home leapt by almost £4,000 in January to reach £291,500. But in the latest data release, the department’s number-crunchers have revised this figure, and say that the average UK property price actually fell by £1,700 in January.



A further fall of just over £2,000 in February means that, according to the ONS, the typical UK figure stands just shy of £283,700. This is the lowest headline figure since July 2015.



London homeowners scanning the latest ONS data to see how much more money their property has earned them could be forgiven for doing a double-take, as the latest data suggests that the value of their bricks and mortar has plummeted.



Last month the ONS declared that the average London house price hit a record high of £551,000 in January. That was £15,000 up on December’s figure of £536,000 - prompting the Guardian to report that London house prices “rose almost £500 a day in January”, and that the capital was “powering ahead”.



But the latest figures paint a very different picture. They state that the average London house price in February was £524,000. This figure - £12,000 down on December 2015, and £27,000 lower than the figure declared for January - presumably incorporates a substantial revision similar to that made to the January UK figure.



In its new report, the ONS does not address the apparent discrepancies directly, though it said London was one of the regions that had fallen back “from the record levels witnessed in previous months”.



When asked to explain the figures, a spokesman for the ONS said that every January the index “weights” were updated to ensure it keeps up to date with changes in the types of properties being bought, and therefore reflected the price of the average home.



He added: “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.”



When it came to London, a decrease in the average price between January and February was not unusual, said the spokesman. “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.”

