The increase left the typical UK home costing £205,846, according to Nationwide
What’s the latest?
House price growth sped up in February with property values climbing by 0.6%.
The increase, which followed a 0.2% rise in January, left the typical UK home costing £205,846.
The annual rate at which house prices are increasing also picked up slightly during the month to stand at 4.5%, compared with 4.3% in the year to the end of January, according to Nationwide Building Society.
Why is this happening?
Nationwide said the housing market continued to be supported by the UK economy, which remained relatively strong.
Economic growth accelerated slightly between October and December, while the unemployment rate remained stable at an 11-year low of 4.8%.
But the group warned the outlook was uncertain, and the economy was likely to slow down during 2017, with consumer spending hit by the weaker pound.
Robert Gardner, Nationwide’s chief economist, said: “Nevertheless, in our view a small rise in house prices of around 2% is more likely than a decline over the course of 2017, since low borrowing costs and the dearth of homes on the market will continue to support prices.”
Who does it affect?
The fact that the heat appears to have come out of the property market is good news for those looking to buy a home as it takes off some of the pressure to purchase somewhere quickly.
But the ongoing shortage of homes for sale continues to be an issue as it limits choice for potential buyers.
The fact that house price growth is expected to slow further may also have an impact on stock levels, as homeowners are more likely to put their homes on the market to ‘test the water’ during periods of strong increases in property values.
Sounds interesting. What’s the background?
Nationwide said there had been a significant increase in the proportion of people buying property with cash during the past decade.
It said cash transactions had soared from just 20% of all purchases in 2005/2006 to around 35% now.
But Nationwide said the rise was driven by a decline in mortgage lending, rather than a jump in actual cash transactions.
Even so, the share of cash buyers has not fallen back as the economy has recovered and lending has picked up again.
The level of people buying with cash peaked at 38.9% in the first quarter of 2016 as investors rushed to complete purchases before new higher stamp duty rates came into force in April.
Top 3 takeaways
- House price growth sped up in February with property values climbing by 0.6%.
- The increase, which followed a rise of 0.2% in January, left the typical home costing £205,846.
- The annual rate at which prices are increasing also picked up slightly during the month to stand at 4.5%, compared with 4.3% in the year to the end of January.