The Nationwide Building Society has published its UK House Price data for October 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 164,153 (compared with GBP £163,964 in September 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). UK prices have declined by 0.9% in the past 12 months and are now 11.8% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of October 2012 being GBP £164,153 (or €203,960 at GBP 1 = EUR 1.2425) is 29% above the €158,322 implied by applying the CSO September 2012 index to the PTSB/ESRI peak prices in Ireland.
With the latest release from Nationwide, UK house prices have risen 0.9% 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 791 (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 26.5% for NAMA to breakeven on a gross basis.
The next forecast from the UK’s Office for Budget Responsibility which independently monitors and comments on the UK economy is due out on Wednesday this week 21st November 2012. According to the OBR’s current forecast, house prices are projected to fall by 0.4% in 2012 before increasing by 0.1% in 2013, 2.5% in 2014 and 4.5% in 2015 and 4.5% also in 2016. UK inflation has now come down below 3% per annum despite being elevated since the banking crisis in 2007, overall inflation in 2012 is set to stay close to 3% – remember that UK inflation has increased by nearly 18% since their peak in October 2007 whereas in Ireland inflation has been subdued and is less than one third of that – the UK has pumped GBP0.3tn of “quantitative easing” into its GBP1.5tn economy and another GBP50bn has recently been announced. UK interest rates may increase later this year to combat inflation – the base rate has been 0.5% since February 2009.The UK economy is officially projected to grow by an anaemic 0.8% in 2012 in real terms, close to our own Department of Finance’s projection for Ireland at 0.9%. However both the Bank of England and the Confederation of British Industry have recently projected nil growth or recession in 2012.