Our Head of Economics, Keith Church, gives his latest ramblings on the changing economic landscape
1. Halifax’s revamped house price index is out
What has changed? The sample size has increased by 35% and includes shared ownership, new houses and buy-to-let for the first time.
The underlying hedonic regression methodology is still used, but there are actually fewer characteristics in the model. Central heating - a distinguishing attribute in the 1983 house - has gone. In come a far more granular set of locational characteristics. That use of more granular location, which is based on proprietary work by index administrators Markit, brings the Halifax index more into line with those of the Office for National Statistics (ONS) and Nationwide.
Much of the volatility in the previous index was created by the fact the characteristics were fixed by the reference to 1983. The new index uses a chained-linked approach to reflect the changing attributes of a typical house over time.
The reported fit is much better and volatility will apparently be much improved. The average price over the last five years is apparently 2% higher than previously stated. This change has been a long time coming and means we can take one of the UK's leading House Price Index (HPI) measures seriously again.
Halifax house price index: https://www.halifax.co.uk/media-centre/house-price-index/
2. Good and bad news
Bad news: the probability of someone moving from employment to unemployment rose in the last quarter.
Good news: so did the probability of moving in the other direction!
Conclusion: you should look below the economic headlines to understand developments in default and cure rates.
3. Annual changes in London house prices
The House Price Index (HPI) shows annual inflation steady at 0.9% in June.
Annual decline in London eased from 3.1% to 2.7%.
Biggest falls (ex City) were in Tower Hamlets, Hillingdon, Islington and Kingston
Those places with higher increases: Ealing, Barking, Richmond, Sutton and Hounslow.
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