House prices return to growth for first time in more than a year

Annual house prices in the UK returned to growth in February for the first time in more than a year following a dip in borrowing costs, according to figures released by Nationwide on Friday.

House prices rose by 1.2% on the year following a 0.2% decline in January.

On the month, prices were up 0.7%, the same as in January, with the average price of a home standing at £260,420, versus £257,656.

Nationwide said house prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.

Nationwide chief economist Robert Gardner said: "The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries.

"Nevertheless, near-term prospects remain highly uncertain, in part due to ongoing uncertainty about the future path of interest rates. After falling sharply in late December, swap rates, which underpin fixed rate mortgage pricing, have drifted back up.

"Borrowing costs remain well below the highs recorded last summer but, if the recent upward trend is sustained, it threatens to restrain the pace of any housing market recovery.

"While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile."