GB: Halifax HPI


Fri Oct 06 02:30:00 CDT 2017

Consensus Actual Previous Revised
M/M % change 0.1% 0.8% 1.1% 1.5%
Yr/Yr % change- 3 mo moving av 3.6% 4.0% 2.6%

Highlights
UK house prices were surprisingly strong last month according to the Halifax's new survey. A 0.8 percent monthly increase in the lender's HPI was well above market expectations and followed a significantly larger revised 1.5 percent spurt in August. Annual growth over the quarter was 4.0 percent, up sharply from 2.6 percent in June-August and the first acceleration since the fourth quarter of 2016.

The third quarter HPI was 1.4 percent higher than its second quarter mark, the best performance since the three months ending February. However, despite a recent slightly firmer tone to home sales, the Halifax warned that prices continue to be supported by the ongoing shortage of supply. The average stock levels on estate agents' books did edge up in August but remained close to an all-time low.

Increasing risks of a near-term hike in the BoE's Bank Rate are also likely to stifle future demand and without some real progress on the Brexit talks, it seems likely that house prices will see some renewed cooling in the fourth quarter. Still, today's bullish results (which contrast with the modest 0.2 percent monthly rise in the Nationwide's HPI) should slightly bolster the likelihood of a monetary tightening on 2nd November.

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.