House Prices (Hansard, 29 June 2000)

The information requested falls within the responsibility of the National Statistician, who has been asked to reply.

Letter to Lord Jacobs from the National Statistician and Registrar General for England and Wales, Office for National Statistics, Mr Len Cook, dated 28 June 2000.

As National Statistician, I have been asked to reply to your recent parliamentary Questions HL2899 and HL2900. HL2899 asks for the current underlying rate of inflation if the depreciation component had not been introduced in 1995. HL2900 asks by what annual rate the average price of owner occupied homes has depreciated or appreciated since 1995.

In response to Question HL2899, the underlying rate of inflation is taken to mean the Retail Price Index excluding mortgage interest payments (RPIX). If the depreciation component of RPIX were removed, the percentage change over the latest 12-month period (to May 2000) would be 1.6 per cent. This figure is published every month in Table 2 of the Consumer Price Indices First Release and can be downloaded for free from timezone on the National Statistics website at www.statistics.gov.uk.

In response to Question HL2900, a table has been attached showing the Department of the Environment, Transport and the Regions (DETR) house price index for the UK. The rise in house prices demonstrated by this index should not be confused with the depreciation calculation used in the RPI. The 89WA depreciation component of the RPI represents the notional amount needed to be put aside to keep a property in a constant state of repair and at a constant level of quality. It covers large infrequent renovations required to make good deterioration and obsolescence to owner-occupied housing. It does not include routine repairs and maintenance, as these are already covered elsewhere in the index.

DETR house price index for the UK (1993=100)
Year	Index	Percentage change over one year
1995	103.2	0.7
1996	106.9	3.6
1997	116.9	9.4
1998	129.7	10.9
1999	144.6	11.5