GB: Nationwide HPI


Thu Mar 29 01:00:00 CDT 2018

Consensus Actual Previous Revised
M/M % Chg 0.2 -0.2 -0.3 -0.4
Y/Y % Chg 2.6 2.1 2.2

Highlights
House prices were weaker than expected in March. A 0.2 percent monthly decline followed a steeper revised 0.4 percent drop in February to leave the Nationwide's HPI 2.1 percent higher on the year, down from 2.2 percent last time. This was the first back-to-back fall in prices since April/May 2017 and the weakest annual inflation rate in nearly five years.

The quarterly rise in the HPI eased from February's 1.0 percent to 0.8 percent, the slowest pace since the three months to December but still well above the minus 0.1 percent low seen in the second quarter of 2017.

The housing market looks to be treading water. On the one hand, prices remain under downside pressure from Brexit uncertainty, falling real incomes and weak consumer confidence. However, against that, unemployment and mortgage rates are historically very low and supply particularly tight. For now, a broadly flat trend in prices would seem the most likely scenario.

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.