GB: Nationwide HPI


Wed Jun 28 01:00:00 CDT 2017

Consensus Actual Previous
M/M % Chg 0.1 1.1 -0.2
Y/Y % Chg 1.9 3.1 2.1

Highlights
House prices were surprisingly strong in June according to the new Nationwide survey. A 1.1 percent monthly jump followed three consecutive declines and constituted the strongest performance since April 2015. Annual inflation climbed from 2.1 percent to 3.1 percent, its first acceleration in four months.

Even so, prices were still 0.1 percent lower on the quarter, matching the 3-monthly rate posted in March-May. There was no obvious reason for June's unexpected strength and some renewed moderation, if not a partial reversal, is very probable in July. Still, today's report underlines the ongoing support provided by supply shortages and this is very unlikely to end any time soon.

The Nationwide continues to forecast calendar year house price growth of 2 percent in 2017.

Definition
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.

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.