|M/M % Chg||0.2||1.0||0.1|
|Y/Y % Chg||4.1||5.2||5.1|
April house price inflation proved surprisingly strong according to the new Nationwide survey. The HPI was up fully 1.0 percent on the month, its steepest rise since April 2014 and large enough to nudge the annual increase in prices from 5.1 percent to 5.2 percent, the first acceleration in the yearly rate since last August.
Over the three months to April prices advanced 0.7 percent versus the previous period, a tick faster than the comparable March rate but still the second weakest post since June 2013.
April's sizeable bounce came despite a relatively subdued housing market in the first quarter and, as yesterday's provisional GDP data indicated, a marked deceleration in overall economic growth. Rather, record low mortgage rates, tight supply and a still robust labour market seem to be providing some fundamental underpinning. Nonetheless, house price inflation this month remained well short of its double digit levels of mid-2014 and in general housing activity looks to be moving towards a more sustainable growth path.
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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