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UK house prices continued to rise in February but growth looks set to slow in the coming months against a backdrop of higher UK interest rates, mortgage lender Nationwide said on Wednesday.
On an annual basis, the Nationwide UK house price index rose 13% in February, accelerating from 11% in January. The print beat the market forecast, cited by FXStreet, of 11%.
UK house prices increased 1.7% in February month-on-month, ticking up from 0.8% growth in January. The latest reading was more than double the consensus estimate of 0.6%.
The average UK house price stood at £260,230 in February, rising 1.8% from £255,556 in January.
Nationwide said housing market activity remained robust in recent months, with mortgage approvals continuing to run above pre-pandemic levels at the start of the year, but pointed to an uncertain outlook.
‘It is likely that the housing market will slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise above 7% in the coming months,’ said Robert Gardner, Nationwide's chief economist.
‘Indeed, there is scope for inflation to rise even further as events in Ukraine threaten to send global energy prices even higher. Assuming that labour market conditions remain strong, the Bank of England is also likely to raise interest rates, which will exert a further drag on the market if this feeds through to mortgage rates,’ Gardner added.
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