|M/M % Chg||0.3||-0.1||0.3|
|Y/Y % Chg||6.1||5.7||6.8|
The February Nationwide survey put average UK house prices 0.1 percent below their level at the start of the year. The unexpected drop was the first since last September and reduced annual house price inflation from 6.8 percent to 5.7 percent, its weakest mark since September 2013.
The mid-quarter fall means that prices were up 0.8 percent over the latest three months, a tick down from February's pace and the slowest quarterly rate since June 2013.
However, on the whole market fundamentals remain positive with mortgage rates close to record lows, unemployment still declining rapidly and consumers in buoyant mood. As such, today's figures should prove to be in keeping with a continued trend slowdown in housing activity rather than any sharp downward correction in the market.
House price information is derived from Nationwide lending data for properties at the post survey approval stage. Nationwide house prices are mix adjusted that is they track a representative house price over time rather than the simple average price.
Home values affect much in the economy especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.
Although the Nationwide data are calculated similar to the Halifax method Nationwide substantially updated their system in 1993 following the publication of the 1991 census data. These improvements mean that Nationwide's system is more robust to lower sample sizes because it better identifies and tracks representative house prices. Historically, the data go back to 1952 on a quarterly basis and 1991 on a monthly basis.
Over long periods the Halifax and Nationwide series of house prices tend to follow similar patterns. This stems from both Nationwide and Halifax using similar statistical techniques to produce their prices. Nationwide's average price differs because the representative property tracked is different in make up to that of Halifax.
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