GB: Halifax HPI

Fri Jul 07 02:30:00 CDT 2017

Consensus Actual Previous Revised
M/M % change 0.2% -1.0% 0.4% 0.3%
Yr/Yr % change- 3 mo moving av 3.1% 2.6% 3.3%

UK house prices were surprisingly weak in June according to the new Halifax survey. A 1.0 percent monthly decline in the lender's HPI was the first fall since January and means that prices have not risen since last October.

For the second quarter as a whole, the HPI dipped 0.1 percent, a minor improvement on May's 3-monthly result but the third consecutive negative print. Average annual growth over the same period was 2.6 percent, a 0.7 percentage point drop from last time and the lowest mark since March-May 2013. This compares with the 10.0 percent peak in the May quarter of 2016.

The Halifax data contrast markedly with last week's Nationwide report which showed its HPI rising fully 1.1 percent on the month in June. However, both surveys have found a clear trend slowdown in house price inflation over the last year or so. Neither lender anticipates a major decline over calendar 2017 but the deceleration in housing activity could accelerate what already appears to be a significant slowdown in household spending. Today's report increases the likelihood of no change from the BoE MPC in August.

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.