GB: Halifax HPI


Fri Oct 07 02:30:00 CDT 2016

Consensus Actual Previous Revised
M/M % change 0.0% 0.1% -0.2% -0.3%
Yr/Yr % change- 3 mo moving av 5.9% 5.8% 6.9%

Highlights
According to the Halifax's latest survey, UK house prices were little changed in September following a marginally steeper revised 0.3 percent decline in August. A minimal 0.1 percent monthly gain was broadly in line with market expectations but still soft enough to see the annual growth rate for the third quarter fall from 6.9 percent in the three months to August to 5.8 percent, the weakest yearly print since August 2013.

The third quarter HPI was actually 0.1 percent below its second quarter level, its softest performance since November 2012 and indicative of a clear deceleration in underlying trends. This is consistent with recent signs of slowing home sales as well as a steady downward trajectory in mortgage approvals. That said, as ever supply remains tight (the stock of available homes to sell for a third month in a row in August) and this continues to provide fundamental support to prices. Mortgage rates are also at record lows.

The Halifax data are not very different from the 0.3 percent monthly rise posted by the Nationwide's September HPI; at 5.3 percent, annual growth of the latter is also in the same ballpark. UK housing is cooling in response to the Brexit vote but, so far, in general the market still seems to be holding up quite well.

Definition
The Halifax House Price Index (HPI) 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. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and methodology remain unchanged.

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.