The Nationwide Building Society has this morning published its UK House Price data for June 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 £165,738 (compared with GBP £166,022 in June 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 10.9% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of June 2012 being GBP £165,738 (or €207,056 at GBP 1 = EUR 1.25) is 31% above the €157,601 implied by applying the CSO May 2012 index to the PTSB/ESRI peak prices in Ireland. The average home in Northern Ireland in Q1, 2012 was worth €168,347, according to the University of Ulster/Bank of Ireland survey.
With the latest release from Nationwide, UKhouse prices have risen 1.8% 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 816 (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 22.6% for NAMA to breakeven on a gross basis.
According to the UK’s Office for Budget Responsibility which independently monitors and comments on theUK economy, 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 over 15% since their peak whereas in Ireland inflation has been subdued and is one third of that – the UK has pumped GBP0.3tn of “quantitative easing” into its GBP1.5tn economy.UK interest rates may increase later this year to combat inflation – the base rate has been 0.5% since February 2009.TheUK economy is projected to grow by an anaemic 0.8% in 2012 in real terms, close to our own Department of Finance’s projection forIreland at 0.7%.
This morning, the Nationwide has also released its Q2, 2012 series which provides a regional breakdown of prices. All regions have declined in real terms in the past 12 months, given inflation of 2.8%. London and the English South East have been top performers. Northern Ireland is bottom of the league.
NAMA Wine Lake 