GB: Halifax HPI


Thu Nov 05 02:00:00 CST 2015

Consensus Actual Previous
M/M % change 0.6% 1.1% -0.9%
Yr/Yr % change- 3 mo moving av 9.5% 9.7% 8.6%

Highlights
According to the new Halifax survey UK house prices climbed sharply in October. A 1.1 percent increase in the lender's HPI was almost double market expectations and more than reversed September's unrevised 0.9 percent decline. The latest increase means that over the last three month prices were up 2.8 percent versus the previous period and 9.7 percent higher than a year ago after an 8.6 percent annual gain last time.

The surprising buoyancy of the October data reflect an ongoing and sizeable imbalance between demand and supply. New instructions by home sellers fell for an eighth successive month at the start of the quarter and in so doing ensured that the stock of available properties remained at a record low. At the same time, house price expectations are on the rise which, with mortgage rates at record lows, continues to fuel demand. Mortgage approvals in the September quarter were up some 10 percent from a year ago.

The monthly profile to the Halifax's index has been very erratic but the latest quarterly rise was close to the 2.5 percent average for the year to date. This suggests that another bubble is not a major near-term risk but the more medium-term threat is certainly something that the BoE MPC will be keeping an eye on.

Definition
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.

Description
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.