UK house prices outpaced forecasts in February as the property market showed “resilience” against affordability issues and buyers tried to get ahead of stamp duty changes coming in April, the lender Nationwide said.
House prices increased 0.4 per cent between January and February, taking the average cost to £270,493. The typical house price was 3.9 per cent higher than in February last year, slightly down from the 4.1 per cent annual rate in January.
Economists polled by Reuters expected a 0.2 per cent month on month rise and a 3.4 per cent annual increase.
“Housing market activity has also remained resilient in recent months, despite ongoing affordability challenges,” said Robert Gardner, Nationwide’s chief economist.
There was a noticeable pick-up in total housing transactions in the second half of 2024, he said, up 14 per cent compared with the same period in 2023.
Gardner expects that changes to stamp duty at the start of April will “likely generate volatility” in transactions in the near term, as buyers bring forward their purchases to avoid the additional tax.
From April, first-time buyers, for example, will start paying the levy for properties worth £300,000 or more, instead of £425,000 at present.
House prices have also been supported by robust real-wage growth, while mortgage rates have fluctuated over the past year as markets reassessed how much the Bank of England will cut interest rates. Borrowing costs are still well below the peak reached in the summer of 2023.