GB: Nationwide HPI

Thu Jul 02 01:00:00 CDT 2015

Consensus Actual Previous
M/M % Chg 0.5 -0.2 0.3
Y/Y % Chg 3.3 4.6

According to the new Nationwide survey house prices unexpectedly fell 0.2 percent on the month in June, their first decline since February. Annual house price inflation was 3.3 percent, down from 4.6 percent in May and its slowest pace since June 2013.

The monthly HPI data are highly volatile but over the second quarter as a whole some eleven of the thirteen regions covered in the survey saw yearly price rises decelerate although only Wales and Scotland recorded outright declines.

Market fundamentals remain generally positive, notably tight supply and record low mortgage rates. However, today's results provide further signs of some cooling. Having peaked at nearly 12 percent in June last year, annual house price inflation has decreased virtually every month since. The BoE will not be unhappy.

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.