House price growth picked up unexpectedly last month, mortgage lender Nationwide has revealed this morning

House prices rose 6.9% in annual terms in February from 6.4% in January, Nationwide said, above all forecasts in a Reuters poll of economists that had pointed to a slowdown to 5.6%.

In February alone, prices rose 0.7%, more than reversing a 0.2% decline in January and bucking expectations for a 0.3% drop.

Nationwide said the outlook for the housing market was particularly uncertain right now, with the potential for it to be boosted further by Sunak when he presents his annual budget on Wednesday.

But the market could slow because of a weakening labour market, the lender said.

Commenting on the figures, Robert Gardner,Nationwide’s Chief Economist, said:

“February saw the annual rate of house price growth rebound to 6.9%, from 6.4% in January. House prices rose by 0.7% month-on-month, after taking account of seasonal
effects, more than reversing the 0.2% monthly decline recorded in January.

“This increase is a surprise. 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.”

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