Nationwide: UK house price growth remains steady

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The Nationwide Building Society has reported an increase of 0.3% in house prices in February.

The mutual said there was a slight acceleration in annual house price growth to 4.8%.

The average price of a home is now £196,930.

Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth has remained in a fairly narrow range between 3% and 5% since the summer of 2015. This trend was also maintained in February, with house prices up 4.8% over the year, a slight pickup from the 4.4% increase recorded in January.

“The number of mortgages approved for house purchase increased sharply in January to almost 75,000, up from around 71,000 approvals in December and the highest number since January 2014.

“However, much of the increase is likely to be related to the impending increase in Stamp Duty on second homes which is due to take effect in April 2016. This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring/summer.

“Looking through this volatility we expect the underlying pace of activity to increase in the quarters ahead as improving labour market conditions and low borrowing costs provide ongoing support.”

“It’s hard to know if the April stamp duty deadline will be a speed bump for the market or a speed boost,” said Mark Posniak, managing director at Dragonfly Property Finance.

“Demand from buy-to-let investors will fall away during March but first time buyers could arrive in numbers. The age-old opponent of first time buyers, the landlord, has effectively been red-carded and the playing field is now theirs. As the buy-to-let purge starts in earnest, the appallingly low home ownership rate for younger people may well pick up.

“With Bank rate seemingly set in stone for 2016, and people confident about their jobs, demand is unlikely to wane. Demand is also being driven by the age-old fear of being priced out of the market. It’s especially pronounced in London and the South East.

“While February’s growth rate was benign, the market is likely to pick up in the spring and summer due to the continued imbalance between supply and demand.

“The ebb and flow of the property market is difficult to predict at the best of times but with the possibility of Brexit and the April stamp duty change impacting landlords, it’s bordering on the impossible.”