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‘Surprise’ house price hike leaves ‘unusual uncertainty’

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House prices have continued to soar, Nationwide’s latest House Price Survey has reported.

It puts the February annual rate of growth at 6.9 per cent, and the month-on-month increase at 0.7 per cent.

This continues the trend seen last year and more than wipes out January’s 0.2 per cent fallback.

Nationwide puts the average price of a house in the UK at £231k, more than £1,000 up on January.

‘This increase is a surprise’, said Nationwide’s chief economist Robert Gardner. ‘It seemed more likely that annual price growth would soften further ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.

‘While the stamp duty holiday is not due to expire until the end of March, activity and price growth would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).

‘It may be that the stamp duty holiday is still providing some forward momentum, especially given the paucity of properties on the market at present. Shifts in housing preferences may also be providing a more significant boost to demand, despite the uncertain economic outlook.

‘Many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.

‘As a result, the outlook for the housing market is unusually uncertain. There is scope for shifting housing preferences to continue to boost activity, especially if there is further policy support in the Budget. Nevertheless, if labour market conditions weaken as most analysts expect, it is likely that the housing market will slow in the months ahead’.