UK property prices still accelerating

The property market continues to defy expectations. Industry commentators had suggested that prices would start to level off during Q1. They are doing the opposite.

February saw the highest rise in house price growth since June last year, when the stamp duty holiday was about to end. This is the seventh consecutive month of price increases.

Nationwide's numbers for February

• Annual UK house price growth increased to 12.6% in February, from 11.2% in January
• Prices up 1.7% month-on-month
• Average house price exceeds £260,000 for first time
• Price of typical home 20% higher than February 2020

	February 2022	January 2022
Monthly change	+1.7%	+0.8%
Annual change	+12.6%	+11.2%
Average price ​Not seasonally adjusted	£260,230	£255,556

The price of a typical home rose above £260,000 for the first time in February, an increase of £29,162 over the past 12 months. This is the largest ever annual increase in cash terms since the start of our monthly index in 1991. The price of a typical home is now £44,138 (20%) higher than in February 2020 - the month before the pandemic struck the UK.

The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months.

Robert Gardner, Chief Economist, Nationwide

Outlook

Household inflation and higher mortgage costs are still expected to weigh on consumer confidence over the coming months, dampening the rate of house price growth. Further inflationary pressures are likely as the Russian invasion of Ukraine will drive up the costs two of the most important commodities - energy and wheat.

There has been the normal seasonal uplift in the number of homes coming to market but this has been overshadowed by the increase in the number of buyers. Strong demand has prompted Strutt & Parker to adjust their best case prediction to an overall increase of 7% for the full year, however their numbers were published before the outbreak of war.