UK house prices rise for first time in over a year

UK house prices A woman looks at properties for sale in Hamptons Estate Agents in West Street Horsham , West Sussex , England UK .
UK house prices were in positive territory on an annual basis for the first time since January 2023. (Simon Dack)

UK house prices returned to growth for the first time in more than a year as mortgage rates eased, according to Nationwide.

Property values increased by 0.7% between January and February, making the average home worth £260,420. Annually, house prices increased by 1.2% in February, following a 0.2% fall in January.

It marked the first month since January 2023 that Nationwide recorded positive annual growth in house prices.

Nationwide’s chief economist Robert Gardner said: “House prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects. The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market.”

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Earlier this week, the Bank of England said that the number of mortgage approvals made to home buyers jumped to the highest level since October 2022 in January this year.

HM Revenue and Customs (HMRC) figures showed this week that 82,000 home sales took place in January, which was 12% lower than January 2023 and 2% higher than December 2023.

However, Quilter’s mortgage expert Karen Noye highlights, some lenders have recently been raising their mortgage costs. She also points out that some lenders, including Nationwide, have recently been raising their mortgage rates.

“Lower mortgage rates at the start of the year appear to have spurred some buyers back to the market which has buoyed prices, but more recently we have seen a further uptick in rates as swap rates have risen so this could be relatively short lived,” she said.

“Just last week, lenders including Nationwide, NatWest, Santander and HSBC all made the decision to increase their rates,” she added.

Gardner also warned that uncertainty about the future of interest rates could yet derail price rises. “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,” he said.

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Tom Bill, head of UK residential research at Knight Frank, predicts average house prices will rise by 3% this year, as interest rates are cut. “Banks are keen to lend and should eventually lower rates this year as inflation comes under control, which we believe will sustain positive annual growth in 2024 and see UK house prices increase by 3%,” he said.

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