GB: Halifax HPI

November 7, 2016 02:30 CST

Consensus Actual Previous Revised
M/M % change 0.2% 1.4% 0.1% 0.3%
Yr/Yr % change- 3 mo moving av 5.2% 5.8% 5.8%

October house prices posted their largest monthly gain since March if the latest report from the Halifax is anything to go by. However, while a 1.4 percent jump followed an upwardly revised 0.3 percent increase in September, this still saw annual growth for the three months to October slide to 5.2 percent, down 0.6 percentage points from the previous period.

Even so, the quarterly change in prices, normally seen as the best guide to underlying developments, edged up from minus 0.1 percent in the three months to September to 0.1 percent. This was still well short of the rates seen over the first half of the year (3.0 percent in February) but also further evidence that Brexit uncertainty has not completely undermined market sentiment.

The Halifax data contrast with the Nationwide's findings released last week which showed prices in the last three months rising a relatively robust 1.2 percent. Somewhere between the two is probably closer to the true picture which in itself would suggest that UK housing market fundamentals remain in pretty good shape.

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.

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.