According to the Nationwide Building Society the average house prices are rising back “over £260,000” which is a positive turnaround for the first time in a year in February.
Property values increased by 1.2% annually last month after a 0.2% drop in January, and on a month-on-month basis prices increased by 0.7% last month, which brings the average house price to £260,420.
Robert Gardner, Nationwide’s chief economist, said, “House prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.”
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Gardener added, “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market.
“Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer inquiries.
“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.
“While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the wealth manager, said: “While buyer appetite is likely to have been boosted by easing mortgage rates in the first few weeks of the year, some lenders increased rates in February as uncertainty around Bank of England interest rate cuts clouded the outlook.”
Tom Bill, head of UK residential research at Knight Frank, said: “Buyers feel confident that the only way for the base rate is down, which has seen demand and house prices pick up in recent months.
“However, the upwards pressure on mortgage rates in recent weeks shows sellers the importance of getting the asking price right.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Mortgage rates are more attractively-priced than they were several months ago, even if the ‘best buy’ deals have been pulled recently.
“There will be ups and downs in mortgage pricing in the weeks and months ahead but there is a growing feeling of optimism that the situation is improving overall, which will be welcomed by hard-pressed borrowers.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “As average house prices rise back over £260,000 it raises another problem, because higher house prices, coupled with rising mortgage rates, risk pushing property out of reach for buyers again.”
Iain McKenzie, chief executive of the Guild of Property Professionals, said: “We’re expecting to see the housing market back on the march this year, and a return to positive annual price growth is another good sign.
“Growth will be welcomed by sellers that have been cautious to stick out the ‘for sale’ signs since prices began to ease.”
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