UK house prices rise in February as chancellor avoids ‘negative speculation’ | Housing market
UK house prices rose in February, preventing a repeat of the “negative speculation” that negatively affected the market ahead of last November’s budget, as Rachel Reeves prepares to deliver her spring forecast on Tuesday.
The average price of a house rose to £273,176 last month, up 0.3% on the previous month, according to Nationwide, the UK’s largest housebuilder. It matched the monthly increase in January and was above analysts’ forecasts for a 0.2% increase. The annual growth rate remained constant at 1%.
The Chancellor’s upcoming forecast has not led to a slowdown in the housing market, as speculation about property tax changes did in the months leading up to last November’s budget.
Jason Tebb, chief executive of property website OnTheMarket, said: “Housing market activity and sentiment has continued to rise this year, with buyers and sellers making their moves with more clarity and confidence, particularly as spring forecasts have not sparked as much negative speculation as the November budget.”
Reeves will seek to display calm and competence after a turbulent 18 months following the latest forecasts from the independent Office for Budget Responsibility on Tuesday. In a brief statement to parliament, the chancellor is expected to highlight progress in reducing the cost of living and say Labor has the “right plan” to fix the economy.
Nationwide chief economist Robert Gardner said the latest house price figures pointed to a “modest recovery from the decline in late 2025” caused by uncertainty about potential property tax changes ahead of the budget. “Housing market activity is likely to pick up in the coming quarters, particularly if the trend of increased affordability seen last year continues as expected.”
Housing market transactions increased by 10% last year compared to 2024. Gardner said increased affordability and easing of mortgage availability were “helping support first-time buyer activity.” First-time buyers are expected to drive sales this year.
Inflation in the UK was expected to ease towards the Bank of England’s 2 percent target by April, which would allow it to make a new interest rate cut in the face of rising unemployment, slow economic growth and slowing wage increases.
But the odds of a rate cut in March fell to 71% on Monday morning from 80% last week after US-Israeli airstrikes on Iran sent oil prices sharply higher on fears of disruption to oil supplies. Global benchmark Brent crude oil rose as much as 13 percent in early trading, reaching $82 per barrel.
Bestinvest personal finance analyst Alice Haine said higher energy prices would make it harder for the Bank to reduce inflation to target. Many borrowers who took advantage of one of the 1.8 million fixed-rate mortgages expiring this year are transferring ultra-low five-year fixed-rate deals into a much higher mortgage rate environment, he said.
“They face refinancing at much higher rates than their current deal, which will put pressure on disposable incomes, but they can be relieved they have avoided the worst of the mortgage crisis.”
The number of new mortgages approved fell to 59,999 in January, the lowest level in two years, the Bank of England reported on Monday.
This slowdown occurred despite the fact that the “effective” interest rate on new mortgages fell from 4.15% in December to 4.09% in January.
Net mortgage borrowing by individuals fell to £4.1bn in January from £4.5bn in December.
