House prices were surprisingly robust in September. A 0.7 percent monthly rise in the Nationwide's index was more than double the market consensus and matched the strongest gain since October last year. Annual inflation climbed from 2.4 percent to 3.2 percent, its highest mark since November 2022 and prices are now just 2 percent below the all-time highs recorded in summer 2022.

The 3-monthly change also accelerated, increasing from 0.6 percent to 0.8 percent to equal a 6-month peak. Most regions saw a pick-up in prices with the North West (5.0 percent) posting the steepest yearly gain.

Accordingly, the underlying trend in house prices remains positive, reflecting a modest strengthening in demand on the back of slowly improving affordability as mortgage rates are cut. More generally, today's updates put the UK RPI at 14 and the RPI-P at 4. Overall economic activity is running just a little ahead of market forecasts.

Prices are seen up 0.3 percent on the month after a 0.2 percent drop in August.

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.