GB: Nationwide HPI

Fri Apr 27 01:00:00 CDT 2018

Consensus Actual Previous
M/M % Chg 0.2 0.2 -0.2
Y/Y % Chg 2.6 2.1

UK house prices edged a little firmer according to the Nationwide's April survey. A 0.2 percent monthly increase in the lender's HPI followed back-to-back falls in February/March and lifted annual inflation from 2.1 percent to 2.6 percent. This was the first rise in the yearly rate since January and also the strongest reading since then.

However, the quarterly change in prices declined from 0.8 percent in January-March to just 0.2 percent, its weakest mark since the second quarter of 2017. This provides a better guide to the underlying trend which currently would seem to be little better than flat. Demand remains soft but supply is as tight as ever, a combination that looks likely to hold over the rest of the year.

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.