House Prices See Slight Increase After Prolonged Decline

After over a year of falling house prices, the property market may finally be turning a corner. According to new data from Nationwide, house prices increased 1.2% in February compared to the previous year – the first annual rise in more than 12 months.

Average house prices across the UK currently stand at £260,420, though they remain 3% lower than the summer 2022 peak. Robert Gardner, Chief Economist at Nationwide commented that “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market.”

However, uncertainty still looms large over the sector. Near-term prospects are described as “highly uncertain”, with interest rate decisions from the Bank of England a major factor. If rates continue rising, it could put further downward pressure on house prices.

Affordability Remains A Challenge

For many prospective buyers, particularly first-time buyers, affordability is still a huge barrier in today’s market. With house prices and mortgage rates both higher than a year ago, the dream of homeownership seems out of reach for some. One area the new Chancellor may look to address in this week’s budget is boosting support for those looking to get on the property ladder. However, any interventions also risk inflating house prices further if not carefully implemented.

Only time will tell if this February rise for house prices is an anomaly or the start of a sustained recovery. Much depends on how macroeconomic factors like inflation and interest rates evolve over the coming months. For now, the outlook remains uncertain.