GB: Halifax HPI

Wed Jul 08 02:00:00 CDT 2015

Consensus Actual Previous Revised
M/M % change 0.3% 1.7% -0.1% 0.3%
Yr/Yr % change- 3 mo moving av 9.6% 8.6%

According to the Halifax house prices were surprisingly firm in June. The lender's HPI rose a very solid 1.7 percent on the month, the sharpest gain since January, its fourth advance in a row and that following a stronger revised 0.3 percent increase in May. Prices over the second quarter were up 3.3 percent, a 0.6 percentage point gain versus the first quarter rate, and stood 9.6 percent higher than a year ago, the fastest pace since September 2014.

The Halifax attributed the buoyancy of the June data to a record supply shortage together with the combined effects on demand of very low mortgage rates, decent economic growth, rising employment and increasing real earnings.

Nonetheless, the Halifax figures contrast quite sharply with those from the Nationwide which, released last week, showed June house prices falling a monthly 0.2 percent for an annual rise of just 3.3 percent. It may well be that something in the middle provides a more accurate picture of underlying trends but in any event, the BoE MPC will be keeping a wary eye on market developments. It is certainly not interested in seeing prices decline but the last thing it wants now is another housing bubble.

Halifax House Price Index is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The Index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month.

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.