The Nationwide Building Society has this morning published its UK House Price data for September 2011. The Nationwide tends to be the first of the two UK building societies (the other being the Halifax) to produce house price data each month, it is one of the information sources referenced by NAMA’s Long Term Economic Value Regulation and is the source for the UK Residential key market data at the top of this page.
The Nationwide says that the average price of a UK home is now GBP £166,256 (compared with GBP £165,914 in August 2011 and GBP £162,764 at the end of November 2009 – 30th November, 2009 is the Valuation date chosen by NAMA by reference to which it values the Current Market Values of assets underpinning NAMA loans). Prices in the UK are now 10.6% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of August 2011 being GBP £166,256 (or €191,294 at GBP 1 = EUR 1.1506) is 7.6% above the €177,812 implied by applying the CSO August 2011 index to the PTSB/ESRI peak prices.
With the latest release from Nationwide, UK house prices have risen by 2.15% since 30th November, 2009, the date chosen by NAMA pursuant to the section 73 of the NAMA Act by reference to which Current Market Values of assets are valued. The NWL Index is now at 853 (because only an estimated 20% of NAMA property in the UK is residential and only 29% of NAMA’s property overall is in the UK, small changes in UK residential have a negligible impact on the index) meaning that average prices of NAMA property must increase by a weighted average of 17.3% for NAMA to breakeven on a gross basis.
The short-term outlook for UK residential, like the UK economy as a whole, remains bumpy. It seems as if UK interest rates will be held at historic lows for some time to come – the base rate which has been at 0.5% since February, 2009. Inflation remains above 4% per annum and is projected to finish 2011 at 4-5%. It’s worth pointing out that CPI inflation in the UK has increased by 14.1% (105.3 to 120.1) since October 2007 – the peak in house prices – no doubt as a result in part to the GBP 200bn of quantitative easing applied in the UK. Unemployment in the UK remains elevated (for it) at 7.9% – paradise compared with the 14.5% unemployment here. Mortgage lending in the UK picked up in July 2011, but a report by the Land Registry indicated a declining pattern of transactions over the past year.
This morning the Nationwide also released its quarterly house price series which shows prices by region with changes over various periods. This shows that the southeast (Outer Metropolitan), East Anglia and London were the top performers in the past year, but with increases of only 0.5-1.3%, when set against inflation of 4-5%, even these regions fell in real terms.