Derin Clark

Derin Clark

Online Reporter
Published: 28/02/2020

This month house prices have increased by 2.3% year-on-year, with the average house now costing £216,092, the latest Nationwide House Price Index figures reveal.

The figures show that this is the strongest house price growth since July 2018, as Robert Gardner, chief economist at Nationwide, said: “UK annual house price growth continued to edge higher in February, rising to 2.3% from 1.9% in January – the strongest rate for 18 months.

“While overall economic growth ground to a halt in the final three months of 2019, labour market conditions remained buoyant and borrowing costs low. The decisive election outcome may have provided a boost to buyer sentiment.”

While the housing market looks strong, Gardner warns that there is still economic uncertainty that could impact house prices, he added: “Looking ahead, economic developments will remain the key driver of housing market trends and house prices. Business surveys suggest that activity recovered in the New Year, but there are still significant uncertainties that threaten to exert a drag on the economy in the coming quarters.

“The global economic backdrop remains challenging, with the coronavirus outbreak expected to weigh on global activity in the coming quarters. Investment is likely to remain subdued until the UK’s future global trading relationships become clearer, which is unlikely until early next year.

“Overall, we expect the UK economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat in 2020 as a whole.”

Property wealth bolsters households’ net wealth

Further information released in the Nationwide House Price Index shows that property wealth is the second largest store of household wealth, after private pensions. Gardner explained:

“Property wealth also includes other properties owned by households, such as second homes and buy-to-lets, as well as land. More than one in 10 (12%) households have additional property wealth – buy to let is the most common form, with 1.4 million households owning rental property, while nearly a million have a second home.

“The Office for National Statistics (ONS) Wealth and Assets Survey also provides an interesting insight into the distribution of asset holdings. In the latest survey, the wealthiest 10% of households held around 45% of total household wealth, 47% of private pension wealth, 39% of net property wealth and 66% of other financial wealth.

“By contrast, the lower 50% of households held less than 10% of total wealth, property wealth and private pension wealth, and just 2% of other financial wealth.”

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for sale sign outside residential house

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