For the first time in over a year, UK house prices saw an increase in February. This upswing in the housing market was primarily due to the fall in borrowing costs, as reported by the Nationwide Building Society on Friday.
There was a year-on-year increase of 1.2 percent in house prices, a significant shift from the 0.2 percent decrease noted in January. Previously, the forecast predicted a rise of only 0.3 percent. This increase marked the first market upturn since January 2023.
On a monthly basis, there was a rise of 0.7 percent in house prices, the same rate as observed in January. According to Nationwide's Chief Economist, Robert Gardner, "House prices are now about 3% below the peak values recorded in the summer of 2022, after adjusting for seasonal changes."
Gardner indicated that industry data pointed towards a significant increase in mortgage applications and surveyors also reported a surge in new buyer enquiries. However, he warned that the near-term outlook remains particularly uncertain due to ongoing doubts over the future direction of interest rates. He added, "Borrowing costs are still significantly below the peak levels seen last summer, but if this recent upward trend continues, it could potentially dampen the rate of housing market recovery."
Furthermore, Gardner noted a decrease in the strain on household finances, with wages now growing faster than inflation by a considerable margin. Despite this, he highlighted that it would take some time to recover from the losses of the past few years given the fragile state of consumer confidence.
An associated report released the previous day also suggested improvements in the property market. It was noted that mortgage approvals for home purchases had risen to 55,200 in January, up from 51,500 in December.
