GB: Nationwide HPI


Thu May 31 01:00:00 CDT 2018

Consensus Actual Previous Revised
M/M % Chg 0.2 -0.2 0.2 0.1
Y/Y % Chg 3.0 2.4 2.6

Highlights
House prices unexpectedly fell 0.2 percent on the month in May, their third decline since January. The drop shaved the annual inflation rate by a couple of ticks to 2.4 percent although this failed to fully reverse April's 0.5 percentage point spike.

Over the last three months, the HPI also dipped 0.2 percent, suggesting a gently weakening underlying trend. Even so, the fall here is modest and in line with little real change in the balance between supply and demand. Hence, while new buyer enquiries remain subdued, the supply of properties available for sale is still around record lows.

The Nationwide expects a similar pattern to hold over the rest of 2018 for when it continues to see a calendar year increase in prices of just 1.0 percent.

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.