Nationwide Reports Surprise House Price Growth | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 02/03/2021

Many predicted that February would see housing prices continue to fall as the approaching stamp duty deadline slows down the market, so the February Nationwide House Price Index showing that house prices have risen by 0.7% month-on-month will come as a surprise to many.

The average house price for February 2021 stood at £231,068, up from £229,748. “This increase is a surprise,” said Robert Gardner, chief economist at Nationwide. “It seemed more likely that annual price growth would soften further ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.

“While the stamp duty holiday is not due to expire until the end of March, activity and price growth would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).

“It may be that the stamp duty holiday is still providing some forward momentum, especially given the paucity of properties on the market at present. Shifts in housing preferences may also be providing a more significant boost to demand, despite the uncertain economic outlook.

“Many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.”

Experts are now looking towards tomorrow’s budget, in which Chancellor Rishi Sunak is expected to announce an extension of the stamp duty holiday until the end of June, as well as a scheme to help boost homeownership for those with a 5% deposit. Some believe that if these initiatives go ahead, they could help to continue momentum within the housing market. As well as this, the fact that mortgage lenders continue to offer competitively low rates may help those considering upsizing to a property that provides more room and outdoor space to make the move.

Saying this, Gardner warns that “the outlook for the housing market is unusually uncertain”. He added: “If labour market conditions weaken as most analysts expect, it is likely that the housing market will slow in the months ahead.”

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