|M/M % Chg||0.6||0.5||-0.2|
|Y/Y % Chg||5.6||5.2||4.8|
The housing market failed to cool as anticipated in August if the new Nationwide survey is anything to go by. In fact, rather than declining, prices rose a solid 0.6 percent on the month, their sharpest gain since March. This lifted annual house price inflation from 5.2 percent in July to 5.6 percent, also its highest mark in five months.
Since the Brexit referendum in June, the HPI has advanced a cumulative 1.1 percent and prices are up by the same amount over the last three months, normally seen as the best guide to underlying trends.
The buoyancy of prices comes in the face of indications of some slowdown in demand, notably falling buyer enquiries and a decline in both mortgage borrowing and approvals. Accordingly, it would seem that, for now at least, any downturn here is being offset by the lack of supply. The stock of properties for sale remains close to a thirty-year low. If so, even a further reduction in demand may not have an unduly negative impact on house prices which, in turn, would be one less potential negative for the economy for the BoE MPC to worry about.
The Nationwide House Price Index (HPI) provides house price information 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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