House prices have recorded growth for the sixth consecutive month
The latest data released by Nationwide this morning has shown that annual house price growth remained broadly stable in February at 3.9%, compared with 4.1% in January.
On a monthly basis, there was a rise of 0.4%, with the price of a typical home in the UK now standing at £270,493 - up from £268,213 in January.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “The price of a typical UK home rose by 3.9% year on year in February, similar to the annual pace of growth seen in January. House prices increased by 0.4% month on month, after taking account of seasonal effects - the sixth consecutive monthly gain.
“Housing market activity has also remained resilient in recent months, despite ongoing affordability challenges. Indeed, the second half of 2024 saw a noticeable pick up in total housing transactions, which were up 14% compared with the same period in 2023.
However, taking 2024 as a whole, transactions were still modestly (6%) lower than the levels prevailing before the pandemic struck in 2019.
Gardener continued, “In terms of the pattern of transactions, it is notable that first-time buyer activity continued to recover, with mortgage completions in 2024 just 5% below 2019 levels. This represents a solid performance, given the interest rate environment – for example, five-year fixed mortgage rates are currently around 4.4% (for borrowers with a 25% deposit) compared to c2% in 2019.
“Cash transactions remained particularly robust, with activity 2% above pre-pandemic levels.
“The last 12 months have seen a gradual increase in the number of buy-to-let purchases involving a mortgage, with rental increases and an easing in buy-to-let mortgage rates improving the ability to raise finance. Nonetheless, activity remains quite subdued compared to historic levels.
However, he added "It is important to note that some cash purchases are also undertaken by landlords and that activity in this space appears to have remained more buoyant. However, higher transaction costs, as a result of recent and upcoming stamp duty changes and uncertainty relating to the regulatory environment, also appear to be having a cooling effect on this segment of the market.
“Looking ahead, the changes to stamp duty at the start of April are likely to generate volatility in transactions in the near term, as buyers bring forward their purchases to avoid the additional tax. This will likely lead to a jump in transactions in March, and a corresponding period of weakness in the following months, as occurred in the wake of previous stamp duty changes.”
Tom Bill, head of UK residential research at Knight Frank, said: “House price growth has come under downward pressure this year as supply exceeds demand. Buyers are no longer navigating the choppy waters of double-digit inflation but they are swimming against a gentle and unpredictable current as Budget plans are implemented and the government seeks economic growth. We expect low single-digit house price growth this year that will hopefully surpass the rate of CPI inflation.”
Nathan Emerson, CEO of Propertymark, comments: “Year on year it is positive to see progression within the housing market, and it is encouraging to see momentum continue as we head further into 2025. There are still aspects to be mindful of, however, such as how inflation could influence future base rate decisions and what effect on affordably that could have.
“With inflation now sitting at 3 per cent, which is above the Bank of England’s initially targeted level, we could see it becoming potentially more challenging for people to approach the buying and selling process should this translate into higher interest rates as a result.”
Matt Thompson, head of sales at Chestertons, says: “February’s property market saw a decline in first-time buyer enquiries as the chances of finding a property in time to beat the changes to stamp duty are now nil. We did, however, see continuous demand from other buyer demographics; especially after the Bank of England announced a rate cut to 4.5%. With the news of sub-4% mortgages returning to the market, we expect more house hunters to start their search over the coming weeks.”
CEO of Yopa, Verona Frankish, said: “The UK property market has begun the year on the front foot and we’re now seeing the rate of house price growth start to accelerate, as more buyers push on with their plans to purchase following a brief respite over the Christmas period.
"A degree of this increased activity in recent months has, of course, been spurred by the impending stamp duty deadline at the end of March, with those making their move keen to reach completion and avoid any increased cost when buying.
"However, we’ve seen the vast majority of buyers take the potential stamp duty cost increase into consideration before submitting their offers, so whilst there may be a momentary market correction, we expect momentum to continue building beyond 1st April.”
Director of Benham and Reeves, Marc von Grundherr, commented: “A consistently positive performance has been the theme for the UK property market over much of the last year and this theme has so far continued in 2025.
"House prices may not be climbing at the same rate as previous market peaks, but some may argue that this more measured rate of growth is far healthier for the market, particularly when you consider that first-time buyer activity is on the up, despite the fact that this market segment faces the toughest task with respect to affordability.”