|M/M % Chg||0.4||0.3||0.4|
|Y/Y % Chg||3.1||3.2||3.5|
The new Nationwide survey puts UK house prices 0.3 percent higher on the month in August, broadly in line with market expectations. With base effects quite negative, this was a small enough increase to reduce annual house price inflation from 3.5 percent in July to 3.2 percent, its slowest rate since June 2013 and some 8.6 percentage points below its June 2014 peak.
Over the three months to August the HPI was up 0.7 percent, down from 0.9 percent in July and the weakest print since April. This measure has been trending lower since early last year and would suggest that the risks of another bubble in the market are still easing.
That said, as the Nationwide points out, a divergence between rising demand and diminishing supply surveyors reported the lowest ever number of properties on their books in July could see renewed upside pressure on prices later in the year. The BoE MPC will continue to monitor market conditions very closely.
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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