House prices in the UK remained "stable" in February, increasing by 3.9% year-on-year, Nationwide has revealed.

The building society’s house price index revealed that this growth slowed slightly compared to an increase of 4.1% in January.

The average house price in the UK now stands at £270,493, increasing by 0.4% month-on-month.

Chief economist at Nationwide, Robert Gardner, said: "Housing market activity has remained resilient in recent months, despite ongoing affordability challenges. Indeed, the second half of 2024 saw a noticeable pick up in total housing transactions, which were up 14% compared with the same period in 2023.

"However, taking 2024 as a whole, transactions were still modestly (6%) lower than the levels prevailing before the pandemic struck in 2019.

"In terms of the pattern of transactions, it is notable that first-time buyer activity continued to recover, with mortgage completions in 2024 just 5% below 2019 levels. This represents a solid performance, given the interest rate environment – for example, five-year fixed mortgage rates are currently around 4.4% (for borrowers with a 25% deposit) compared to c.2% in 2019."

Nationwide added that it has seen a "gradual increase" in the number of buy-to-let purchases involving a mortgage, with rental increase and an easing in BTL mortgage rates "improving the ability to raise finance".

However, it did add that this activity remains "quite subdued compared to historic levels".

Personal finance analyst at Bestinvest, Alice Haine, stated that the "resilience in the housing market came despite worries about the health of the wider economy", with changes to national insurance, business rates and the increase in the minimum wage announced in the Autumn Budget.

She concluded: "The impending changes to stamp duty land tax thresholds, which take effect from April 1, helped to drive housing market activity in February. The Government’s decision not to extend the temporary increases to the thresholds - first put in place in September 2022 by the previous Government - beyond March, has encouraged buyers to rush through deals in a bid to secure a lower tax bill while they can.

"While property prices are expected to remain resilient in the first quarter, partly a reflection of base rate cuts and the stamp duty deadline, it will be interesting to see whether that momentum continues beyond April when the property tax thresholds revert back to their previous, lower levels.

"Affordability levels may be improving, albeit very slightly, but they remain severely stretched by historical standards. Mix that in with property tax increases, rising living costs from April when household bills jump up once again, job uncertainty and the potential for wage growth to slow and some sellers may be compelled to adjust asking prices downwards to secure a sale."

---