GB: Nationwide HPI


Thu Feb 01 01:00:00 CST 2018

Consensus Actual Previous
M/M % Chg 0.1 0.6 0.6
Y/Y % Chg 2.5 3.2 2.6

Highlights
According to the Nationwide's new survey, house prices made a solid start to 2018. January's HPI rose a stronger than expected 0.6 percent on the month, matching December's advance and lifting annual house price inflation from 2.6 percent to 3.2 percent, a 10-month high.

The latest increase puts the 3-month change at 1.0 percent, up from 0.8 percent in the fourth quarter and equalling its best performance since August-October 2016. With mortgage approvals falling quite sharply in December, consumer confidence low and retail sales slumping, the sustained buoyancy of house prices last month is surprising. However, once again the lack of supply continues to provides considerable support and this is unlikely to change anytime soon. Brexit uncertainty and the ongoing squeeze on household budgets will continue to weigh but recent developments suggest that house prices will achieve a soft landing.

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.