The UK average house price is about to get an overhaul. The Office for National Statistics (ONS) is working on a change that will be put into effect in a few months as to how the average house price figures are obtained. The new formulation will put the ONS data more in line with other house price indices published.

It is estimated that the ONS average house price figure will be reduced by an amount as great as £37,000.

The new mathematical formula in determining the average house price will give less significance in the formulation to high value properties. It will also include cash purchases which had been ignored by the previous ONS formulation. Currently only mortgaged purchases are considered for the average house price calculation.

The revised price index formulation is being adopted to better meet the needs of users of the data.

The new data series will be published in June and will be updated each month thereafter. The new index will replace that of the existing ONS house price series and the Land Registry indices.

ONS statistician Chris Jenkins said, “By combining different data sets and using the best internationally agreed methods, the new UK house price index will give the best possible picture of the changing UK property market.”

Economists are expecting the UK house price to increase by 3% to 6% for the year. The recent boost to the average house price due to landlords and buyers of 2^nd homes seeking to beat the stamp duty increase effective April 1 could be followed by a short natural correcting once April and May data is released. Yet, due to the low supply of properties coming onto the market, demand may keep the boost in place and the seasonal summer buying spree will carry it on into autumn. This could have economists hitting the high end mark of their forecasts by the end of the year.