|M/M % Chg||0.4||0.3||0.3|
|Y/Y % Chg||4.9||4.8||4.4|
Average house prices were up 0.3 percent on the month according to the Nationwide's February report. The increase, which was broadly in line with expectations, matched an unrevised gain in January and boosted annual inflation from 4.4 percent to 4.8 percent, its strongest mark since April 2015.
The quarterly increase in the HPI, the best guide to underlying developments, was 1.4 percent. This was a tick higher than in the three months to January but in line with the fourth quarter outturn. This measure has been moving sideways since last November.
February's house price update follows the upbeat news on January mortgage approvals and lending announced earlier in the week. The impending increase in Stamp Duty on second homes due in April has probably artificially boosted activity to some degree but overall the housing market still looks to be in good shape. The Halifax data, due shortly, ought to confirm this picture.
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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