GB: Nationwide HPI

Thu Nov 30 01:00:00 CST 2017

Consensus Actual Previous
M/M % Chg 0.2 0.1 0.2
Y/Y % Chg 2.7 2.5 2.5

According to the Nationwide's new survey, UK house prices edged just 0.1 percent higher in November. This was their third straight gain, albeit the smallest of the period, and saw annual house price inflation hold steady at 2.5 percent.

Over the latest three months the HPI was up 0.6 percent versus May-August, its weakest quarterly increase since the three months ending July. Nonetheless, this guide to underlying developments has been in positive territory since the second quarter, suggesting that the market is still on course for a soft landing

Supply shortages continue to provide vital support for prices and while last week's Budget boost to construction should dampen this effect over the longer-run, for now this will remain a key factor. Meantime, record low mortgage rates are helping to lift demand but, with consumer budgets still being squeezed, their impact is likely to be only limited. Indeed, mortgage approvals seem to be trending down.

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.

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.