Nationwide House Price Index
House Prices in October 2022
The average UK house price in October 2022 was £268,282
House prices fell by 0.9% during the last month
House prices increased by 7.2% over the last year
Nationwide House Price Index Chart
Nationwide House Price Index Commentary
Has the cost of living crisis coupled with the September mini-budget finally taken the wind out of the sails of house prices? House price growth stalled in September and fell by around £5,500 in October.
House prices fell in October 2022, and the Nationwide continues to believe that the UK housing market will slow in the coming months as the cost of living starts to bite and rising mortgage rates start to bite. The housing market was relieved when Chancellor of the Exchequer Jeremy Hunt reversed most of the measures announced in the Kwarteng mini-budget and the financial markets appear to be willing to give Rishi Sunak the benefit of the doubt as incoming Prime Minister.
House prices in the UK are now more than £50,000 higher than they were before the start of the pandemic in 2020, which will provide some comfort to many as we enter unchartered waters, but those who bought during recent months may fear that they bought at the top of the market. The Nationwide sums up the situation as it relates to housing affordability Housing affordability is becoming more stretched. Deposit requirements remain a major barrier, with a 10% deposit on a typical first-time buyer property equivalent to almost 60% of annual gross earnings – an all-time high.
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Nationwide House Price Index methodology
The Nationwide house price index is calculated from owner-occupier house purchase transactions which are in part-financed by a mortgage. Buy to let and cash purchases are not included in the Nationwide House Price Index.
The monthly house price measures the mix adjusted house price for houses across the UK.
The Nationwide uses a statistical process called hedonic statistical regression to calculate the average UK house price.
The nationwide takes into account the following factors when calculating its house price index:
UK location - which part of the country the house is located
Size of property - the physical size of the property, larger houses usually a command a higher price
Number of bedrooms - once again a higher number of bedrooms normally implies a higher price. The Nationwide looks at five types 1 bedroom, 2 bedrooms, 3 bedrooms, 4 bedrooms and more than 4 bedrooms.
Property type: The Nationwide house price index considers several different house types: detached homes, semi-detached homes, terraced houses, flats and apartments.
Neighbourhood characteristics: The Nationwide classifies homes as being included in one of 59 different neighbourhood categories (such as retirement neighbourhoods or council /social housing neighbourhoods)
The index is 'mix-adjusted' so that changes in the number of different sized properties sold each month doesn't impact the average house price. For instance, if one month more 4 bedroom detached houses were sold than normal this may increase the reported average house price necessarily.
The Nationwide house price index is based on the mortgages it approves itself. The Nationwide is the UK's second-largest mortgage lender with a market share of around 15%.
Seasonal adjustments. The Nationwide believes that house prices are slightly seasonal, house prices are typically higher in spring and summer months. This ebb and flow of demand can impact house prices by up to +/-1.5%. The Nationwide House Price Index adjusts for its view of seasonal factors
History of the Nationwide House Price Index
The Nationwide House Price index has been running on an annual basis since 1952, a quarterly basis since 1974 and from 1991 on a monthly basis. This makes it the longest-running private house price index in the UK and the second longest-running monthly house price index (after the monthly Halifax house price index which has been running since 1983.
Alongside its monthly house price index, the Nationwide publishes a more detailed index each quarter including 13 regional house price indices by buyer type (first-time buyers and former owner-occupiers). The Nationwide also publishes UK house price estimates based on four different property types: detached houses, semi-detached houses, terraced houses and flats and apartments.
The final set of house price indices produced by the Nationwide Building Society relate to new and existing homes.
In total the Nationwide produces 48 different house price indices on a quarterly basis.