Indicator Digest - CMS Forex

HBOS Housing Prices

Halifax is the UK's largest mortgage lender and conducts a wide range of housing research including the long standing Halifax House Price Index. Launched in 1984, the Halifax House Price Index is based on the lending of the UK's largest mortgage lender and provides the longest unbroken monthly data series of any UK housing index. - from HBOS

Main Indicator: House Prices m/m (Halifax Bank of Scotland)

Most Recent Release

July
10th, 2008

Actual

Forecast

Revised Form

-2.0%

-1.0%

-2.5%

N/A

For June
Provided by: Halifax Bank Of Scotland
Official Release: PDF

House Prices 3m/y: -6.1%, pr. -3.8% (May), -0.9% (Apr), 1.1% (Mar), 4.2% (Feb)
Avg. Price (s.a.): £180,344, pr. £184,111

UK housing prices continue to tumble, falling an annual rate of 6.1%, the largest fall since 1993. Prices fell 2% on the month to an average of £180,344 ($356,000).

From the Release: "On an annual basis, house prices in June were 6.1% lower. UK average prices have returned to the level they were at in August 2006. The UK average price remains slightly higher (2%) than two years' ago, more than 10% higher than in June 2005 and almost 40% above that in June 2003. House prices fell by 2.0% in June compared to 2.5% in May, a slight moderation in the recent rate of decline."

Table of Past Data

	12/5	1/8	2/5	3/7	4/8	5/2	6/5	7/10

Actual	-1.1%	1.3%	0.0%	-0.3%	-2.5%	-1.3%	-2.4%	-2.0%
Forecast	0.0%	0.5%	-0.4%		-0.3%	-0.6%	-1.1%	-1.0%
Previous	-0.7%	-1.3%	1.4%	0.0%	-0.4%	-2.5%	-1.3%	-2.5%
Revised From	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A

Past Releases

June
5th, 2008

Actual

Forecast

Revised Form

-2.4%

-1.1%

-1.3%

N/A

For May
Provided by: Halifax Bank Of Scotland
Official Release: PDF

House Prices y/y: -3.8%, pr. -0.9%, 1.1%, 4.2%
Avg. Price (s.a.): £184,111

The housing bubble from the recent years have been deflating since end of 2007. In the month of May, house prices declined 2.4%, an acceleration of deflation. To put it in perspective, Martin Ellis, chief economist at Halifax noted that house prices rose 79% between August 2002 and August 2007. He adds:

The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability. These factors have curbed housing demand. High employment levels, low interest rates and a shortage of new homes support housing valuations.

Real income has not seen the increase needed to sustain the past year's of housing price surge. Inflation in fuel and food prices pressure consumers and leave them little for to fund house purchases.

May
2nd, 2008

Actual

Forecast

Revised Form

-1.3%

-0.6%

-2.5%

N/A

For April
Provided by: Halifax Bank of Scotland
Official Release: PDF

HBOS House Prices y/y: -0.9%

From the Release:

"House prices fell by 1.3% in April. Prices were 0.9% lower on an annual basis... The decline in prices is driven by a squeeze on spending power and the rapid rise in house prices in the last few years. These factors have curbed housing demand. The rise in interest rates between August 2006 and July 2007 has increased average mortgage costs. A decline in 'real' earnings over the past year has also constrained housing demand."

April
8th, 2008

Actual

Forecast

Revised Form

-2.5%

-0.3%

-0.4%

N/A

For March
Provided by: Halifax Bank Of Scotland
Official Release: PDF

House Prices y/y: 1.1%, forecast 2.4%, pr. 4.2%
Avg. Price (s.a.): £191,556

The Pound plunged overnight as the monthly change for the index recorded the biggest drop since 1992. Banks, cautious due to higher credit conditions, are reluctant to lend as many mortgages. The news, coming on the heels of the Bank of England interest rate announcement Thursday morning, guaranteed at least a 25 basis point cut, though the markets overnight may have been pricing in further rate cuts after this week, as the situation in housing may have to be remedied by bringing the base rate lower as the year progresses.

From the Release:

"House prices fell by 2.5% in March. Prices in Quarter 1 were 1.0% lower than in 2007 Quarter 4. House prices in March were 1.1% higher than a year earlier.

Overall, we expect there to be a modest (low single digit) decline in UK house prices this year. Any declines, however, should be viewed in the context of the significant price rises over recent years. UK prices have increased by 171% over the past ten years and by 51% over the last five years. The average UK price has risen by £120,860 during the past decade from £70,696 to £191,556.

Sound economic fundamentals are supporting house prices. A strong labour market, low interest rates and a shortage of new houses underpin housing valuations. Employment is at a record high and unemployment continues to fall. Employment stands at 29.5 million and has risen by 370,000 over the past year. Unemployment is below 800,000 and has fallen by over 125,000 in the last year. We expect there to be a modest rise in unemployment later in the year, but the scale of the increase is unlikely to cause widespread difficulties for households."

March
7th, 2008

Actual

Forecast

Revised Form

-0.3%

0.0%

N/A

For February
Provided by: Halifax Bank Of Scotland

House Prices y/y: 4.2%, forecast 4.2%, pr. 4.5%
Avg. Price (s.a.): £196,465

February
5th, 2008

Actual

Forecast

Revised Form

0.0%

-0.4%

1.4%

N/A

For January
Provided by: Halifax Bank Of Scotland

House Prices y/y: 4.5%, forecast 4.5%, pr. 5.2%
Avg. Price (s.a.): £197,243

January
8th, 2008

Actual

Forecast

Revised Form

1.3%

0.5%

-1.3%

N/A

For December.
Official Release from HBOS

House Prices HBOS y/y: 5.2%, forecast 4.7%, pr. 6.3%.

Housing prices increased by 1.3% in December, following three successive monthly falls. The chief economist of HBOS says that "a mixed pattern of monthly price rises and falls - as seen over the past few months - typically characterizes a subdued housing market." He also continued that the UK economy is on sound economic fundamentals with strong employment and continued growth. Also, continued easing of interest rates will help the housing market. The HBOS sees housing prices flat in 2008, but putting in in context, there has been a 182% increase to prices in the last ten years.

The report did show that for the 4th quarter home prices were down 0.8%, the first quarter that prices have declined in seven years.

December
5th, 2007

Actual

Forecast

Revised Form

-1.1%

0.0%

-0.7%

N/A

For November.
Halifax House Price Index by HBOS
Prices dropped by 1.1% in November, a third straight month of declines, the worst performance in over 10 years. The average cost of a home in Britain declined 1.1% to 194,895 pounds ($400,000) from a month earlier.

This news, along with slower services growth, was the catalyst for strong movements in Pound pairs (GBP/JPY, GBP/USD, GBP/EUR, and GBP/CHF) as the chances of an interest rate hike tomorrow by the Bank of England increased.

GBP/USD - Post Housing Prices - 250 Pip Swing

GBP/USD - Post Housing Prices - 250 Pip Swing