The average house price increased by 0.3% in February, hitting £196,930, according to figures from Nationwide.
Although activity in the mortgage market was strong at the start of the year, Nationwide’s data – based on loans it approved during February – shows that prices have remained steady.
Average House Price Hits £196,930, According to Nationwide
The monthly growth recorded for February matches that seen in January, and although the annual rate of growth rose to 4.8% from 4.4%, Nationwide claims that it has remained in a fairly narrow range – between 3% and 5% – since last summer.
The Chief Economist at Nationwide, Robert Gardner, believes recent activity was likely to have been driven by a rush of landlords seeking to complete on property purchases ahead of the 3% Stamp Duty surcharge, set to be enforced on 1st April.
“This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring-summer,” he says. “Looking through this volatility, we expect the underlying pace of activity to increase in the quarters ahead, as improving labour market conditions and low borrowing costs provide ongoing support.”1
The Chief UK Economist at Pantheon Macroeconomics, Samuel Tombs, notes that Nationwide’s house price index is showing lower price growth than other measures, which could be down to the sample it was based on.
He states: “Nationwide’s measure of house prices underplays the extent to which the housing market is heating up again. The latest growth rates of all the other main measures of house prices have been significantly stronger over the last six months.”
For January, the Land Registry recorded an average price increase of 2.5% and annual growth of 7.1% – considerably higher than Nationwide’s figures.
However, Nationwide’s data covers the whole of the UK, while the Land Registry only reports on England and Wales, with growth in England typically higher in recent years.
Tombs adds: “We still expect the strengthening labour market, falling mortgage rates and a dearth of homes for sale to result in punchy house price increases this year.”1
Howard Archer, the Chief UK Economist at IHS Global Insight, expects the average house price to rise by 6% over the rest of the year. However, he adds that the EU referendum, scheduled for 23rd June, is a “potential major downside risk to housing market activity and prices”.
He comments: “A vote for Brexit would be liable to see a marked hit to UK economic activity over the rest of this year and in 2017 amid heightened uncertainties, which would likely weigh down heavily on the housing market.”1
Rightmove has predicted that the average house price will reach £300,000 in the near future.
1 http://www.theguardian.com/money/2016/mar/03/house-price-creeps-up-nationwide-mortgage-stamp-duty