Annual UK house price growth increased to 10.9% in the year to February, a figure up from 10.2% in January.

According to the latest UK House Price Index published by the Office for National Statistics (ONS), the average price of a UK home stood at £277,000 in February – an increase of £27,000 on the same month last year.

On a non-seasonally adjusted basis, the ONS revealed that average house prices in the UK increased by 0.5% between January and February, compared with 0% growth during the same months in 2021.

Average house prices increased by 10.7% over the year in England to £296,000, 14.2% in Wales to £205,000, 11.7% in Scotland to £181,000, and 7.9% in Northern Ireland to £159,000. The ONS confirmed that London continues to be the region with the lowest rate of annual growth, at 8.1%.

Commenting on the latest figures, Hargreaves Lansdown senior personal finance analyst, Sarah Coles, said that the property market “continues to defy gravity”.

“Despite rising rates and runaway inflation putting the squeeze on affordability, February saw another record average price, and it was another month where your house made about as much money as you did,” Coles commented.

“However, change may be on the way. We already know that mortgage companies are increasing the assumed costs in their affordability calculations, which will make it harder for people to get a mortgage. We also know that fewer mortgages were approved for future purchases in February – although the levels are still above those seen before the pandemic.

“The imbalance between supply and demand is likely to put a floor under prices, so we're far more likely to see a slowing in price rises rather than falls themselves. However, the spring and summer may well see the market dynamics start to shift.”

Head of mortgage operations at online mortgage broker Trussle, Amanda Aumonier, added:
“The dashboard warning lights are starting to light up. Households are projected to be worse off by around £900 per year from inflation alone, which will without doubt have a knock-on effect on the property market.

“Lenders are clearly beginning to realise this and are betting on an economic downturn impacting the property market. In the past week, we have seen interest rates on five and 10-year mortgage products begin to fall in line, and in some cases even beat those on two-year mortgages.

“This is a sure sign that lenders are anticipating that the Bank of England will need to ease off interest rate rises or even cut them again in the future. However, buyers should be beware that we will likely see rates increase further before any potential decrease.”

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