Nationwide United Kingdom House Price Index (HPI) y/y

Nationwide House Price Index (HPI) y/y is published by one of the world's largest building societies and one of the largest mortgage service providers in the UK. It demonstrates a change in the average price of residential property in the country for the given month compared to the same month of the previous year, based on a data collected by Nationwide since 1952.

HPI information is derived from Nationwide lending data. Property transactions paid by cash are not included in the sample data. The index is seasonally adjusted, because winter months tend to see weaker price rises and spring/summer see higher increases due to market activity changes.

A house price depends on its characteristics, including physical properties (size and number of rooms), as well as the type of district the house is located in. Therefore, the average house cost is calculated using a hedonic regression rather than a simple arithmetic mean. This allows calculating the price of an average "typical" UK house and its change over time. This "typical" house does not physically exist; it represents a certain model with given characteristics, which, in turn, are used in a mathematical formula.

Some transaction types are excluded from the calculation, since they can distort the statistical picture. The following registrations are excluded from the calculations:

• Remortgages and further advances
• Purchases to let properties
• Properties sold with the right to buy sales at discounted price

Nationwide Housing Price Index is an alternative inflation index in the UK housing market. Its advantage over the HPI provided by the Office for National Statistics is a deeper data sampling (quarterly price change statistics have been collected since 1952). The weak point is the limited data source (only mortgage loans issued by Nationwide, no cash transactions).

The index growth can be seen as positive for the pound quotes since it indicates an inflationary increase in the property market.