Nationwide Building Society has reported that house price growth increased to 12.6% in February, from 11.2% in January.
In addition, Nationwide revealed that prices were up 1.7% month-on-month.
For the first time, the average house price exceeds £260,000, with the price of atypical home 20% higher than in February 2020.
Robert Gardner, Nationwide’s chief economist, said: “The price of a typical home rose above £260,000 for the first time in February, an increase of £29,162 over the past 12 months. This is the largest ever annual increase in cash terms since the start of our monthly index in 1991. The price of a typical home is now £44,138 (20%) higher than in February 2020 – the month before the pandemic struck the UK.
“Housing market activity has remained robust in recent months, with mortgage approvals continuing to run above pre-pandemic levels at the start of the year. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.
“The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months.
“The strength is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence. Indeed, consumers’ view of the general economic outlook and prospects for their own financial circumstances over the next 12 months have plunged towards levels prevailing at the start of the pandemic.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Despite recent modest stock improvements, partly prompted by the rise in inflation and interest rates, the continuing overall shortage is constraining activity but supporting the acceleration in prices.
“It is probably too early to gauge the likely impact of the war in Ukraine on the housing market but not much if the first few days are anything to go by. We have already agreed several sales at fairly robust prices this week. The expected additional rise in the cost of living driven by energy prices and possibly interest rates will reduce confidence to take on extra debt and make buyers even more determined not to overpay.”