GB: Halifax HPI


Tue Feb 07 02:30:00 CST 2017

Consensus Actual Previous Revised
M/M % change 0.1% -0.9% 1.7% 1.6%
Yr/Yr % change- 3 mo moving av 6.0% 5.7% 6.5%

Highlights
The Halifax's house price index was surprisingly soft in January. A 0.9 percent monthly drop was the first fall since last August and the steepest since February 2016. It was also sharp enough to reduce annual quarterly house price inflation from 6.5 percent to 5.7 percent, comfortably below the 10.0 percent peak it touched in March.

Even so, for the fourth quarter, the HPI still shows a sizeable 2.4 percent gain versus July-September when it increased a marginally stronger 2.5 percent. The bottom line is that market activity, at least for now, remains relatively robust. Mortgage approvals were up 9 percent on the quarter and supply is as tight as ever with the stock of available homes still close to a record low despite some pick-up in new selling instructions.

The Nationwide's report, released last week, found prices 0.2 percent higher than in November but a yearly increase of only 4.3 percent. Somewhere between the two surveys is probably about right. House prices may struggle in 2017 if Brexit issues weigh significantly but otherwise fundamentals continue to favour a gentle upward trend which would suit the BoE MPC nicely.

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.