The average property price increased by 0.7% in February, the building society said, bringing the price of an average home in the UK to £260,420, up from £257,656 in January. House prices are still around 3% lower than the all-time highs seen in summer 2022 when they reached an average of £273,751.
Robert Gardner, chief economist at Nationwide, said: “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries.”
Whilst rising house prices are good news for homeowners, they will push the dream of home ownership even further out of reach for those hoping to get on the property ladder. Speculation had been rife that the Chancellor could introduce measures to help aspiring homeowners in the Budget.
Uncertain outlook
Despite February’s positive house price data, the outlook for the property market remains uncertain, and depends on whether interest rates start to fall or remain high.Swap rates, which underpin fixed mortgage rate pricing, have ticked up in recent weeks, following a sharp fall in December last year, and many of the major lenders have raised their fixed mortgage rates in response.
Despite recent increases however, mortgage rates are still considerably lower than the averages seen towards the end of 2022, and again last summer.
Mr Gardner said, “While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile.”
