House prices were surprisingly strong at the start of the year. A 0.7 percent monthly increase in the Nationwide's measure was well above the market consensus and the largest increase since October. Prices have not fallen since last August and the latest gain lifted the annual inflation rate from minus 1.8 percent to minus 0.2 percent, its highest mark since January 2023.

The Nationwide noted that while a rapid recovery in prices in 2024 remains unlikely, market conditions are improving and the outlook is now more positive. In particular, mortgage rates are trending down and the previous fall in buyer inquiries has flattened out. In addition, there have been some signs of a rise in the number of properties for sale. That said, house prices are still very high relative to earnings

Today's update underlines the surprising resilience of the housing market to what has been aggressive BoE tightening. More generally, it also boosts the UK RPI to 7 while leaving the RPI-P at minus 20. Recent inflation data have been on the firm side but overall real economic activity is lagging market expectations.

Prices are expected to edge 0.1 percent higher on the month to lift the annual inflation rate from minus 1.8 percent to minus 0.9 percent.

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.