House Prices Break Yearly Decline with Annual Increase
Property prices in the UK have experienced a year-on-year increase for the first time in twelve months, as reported by Nationwide, the country’s largest building society. The data indicates a 1.2% rise in house prices in February compared to the previous year. While there are signs of increased activity in the UK housing market, including a rise in mortgage approvals according to Bank of England figures, Nationwide remains cautious about the future.
Despite the positive annual change, Nationwide emphasized the lingering uncertainty in the market. The recent decrease in borrowing costs at the beginning of the year seems to have stimulated housing market activity, according to Robert Gardner, Nationwide’s chief economist. However, he pointed out that the near-term outlook remains highly uncertain, attributing this uncertainty to ongoing questions about the trajectory of interest rates.
The month-on-month analysis revealed a 0.7% increase in house prices in February, bringing the average UK house price to £260,420. Despite this positive momentum, the Nationwide highlighted that property prices are still 3% lower than their peak in the summer of 2022.
Nationwide’s data focuses exclusively on buyers with mortgages, excluding cash transactions and buy-to-let deals. Notably, cash buyers presently account for more than a third of housing sales, according to the latest official data. The influence of rising house prices, particularly in the context of relatively high mortgage rates, may pose challenges for prospective first-time buyers. As Chancellor Jeremy Hunt prepares to unveil the Budget, there is anticipation for potential government interventions to support first-time buyers.
However, analysts caution that efforts to stimulate the housing market could lead to a further acceleration of house price rises, potentially contributing to overall inflation. As the economic landscape evolves, the delicate balance between encouraging homeownership and managing inflation becomes a focal point for policymakers.
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