Data published by Nationwide Building Society showed that housing prices rose by 0.7% in February after a similar increase in January. Economists had expected prices to rise by 0.3%. In annual terms, house prices rose by 1.2%, offsetting the December drop (-0.2%), and recording the first increase since January 2023. Consensus estimates suggested an increase of 0.7%. As a result, the average price of a typical home (not seasonally adjusted) was 260,420 pounds compared to 257,656 pounds in January. Nationwide said that house prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.
“The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. Nevertheless, near-term prospects remain highly uncertain, in part due to ongoing uncertainty about the future path of interest rates. After falling sharply in late December, swap rates, which underpin fixed rate mortgage pricing, have drifted back up. Borrowing costs remain well below the highs recorded last summer but, if the recent upward trend is sustained, it threatens to restrain the pace of any housing market recovery," said Robert Gardner, Nationwide's Chief Economist.