GB: Nationwide HPI


Fri Nov 27 01:00:00 CST 2015

Consensus Actual Previous Revised
M/M % Chg 0.5 0.1 0.6 0.5
Y/Y % Chg 4.2 3.7 3.9

Highlights
House prices cooled in November according to the new survey from the Nationwide. A minimal 0.1 percent monthly advance followed a slightly smaller revised 0.5 percent rise in October to leave the lender's HPI 3.7 percent higher on the year after a 3.9 percent annual rate last time.

November's monthly increase was the smallest since a 0.2 percent decline in June but still enough to lift the quarterly growth rate from 1.1 percent to 1.3 percent, its fastest pace since September 2014.

The Chancellor's Autumn Statement included a sizeable boost for the house building industry and, with only 135,000 new homes constructed in the year to September, this will be vital if inflation is not to accelerate again. The BoE has clearly indicated its concern about the potential for another housing bubble although for now, any measures aimed at stabilising the market are unlikely to include higher interest rates.

Definition
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.

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.

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.