The Nationwide Building Society has this morning published its UK House Price data for January 2012. 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 £162,712 (compared with GBP £162,228 in January 2012 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 12.5% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of January 2012 being GBP £162,712 (or €191,837 at GBP 1 = EUR 1.179) is 18% above the €162,653 implied by applying the CSO January 2012 index to the PTSB/ESRI peak prices in Ireland. The average home in Northern Ireland in Q4, 2011 was worth €163,510, according to the University of Ulster/Bank of Ireland survey.
With the latest release from Nationwide, UK house prices have now fallen by 0.0% – or a measly GBP 52 to be precise – 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 829 (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 20.7% for NAMA to breakeven on a gross basis.
The UK residential outlook remains shaky with unemployment, slow economic growth and availability of credit all pressing down on prices and in the short term stamp duty concessions are set to run out in March 2012 which may depress the market in the short term. Inflation remains elevated, though dipped to an annualized 3.6% in January 2012, and is set to be 3-4% in 2012. Supply concerns remain in some regions and the UK is being slow to unblock its planning constraints, the base interest rate remains at 0.5% and the UK has a healthily expanding population.
‘……meaning that average prices of NAMA property must increase by a weighted average of 20.7% for NAMA to breakeven on a gross basis’
Is this another way of saying that if NAMA sold all it’s property now it’d make a 20% loss? So if it sold say 50% of it’s property today, it’d have to see a 41.4% increase on the rest to break even?