Commenting on the figures, Fionnuala Earley, Nationwide’s Chief Economist, said: “While the three recent rate rises now seem to be taking their toll on the market, not all indicators are cooling just yet. Buyer interest and mortgage demand are waning, but the supply of properties remains low. This lack of supply will mean that house inflation will remain firm for a while longer, before gradually easing. Prices rose by a steady 0.7% in February, pushing the annual rate of house price growth back into double digits to 10.2%. The price of a typical house now stands at £174,706. This is more than £16,000 higher than this time last year, and the equivalent of a rise of more than £40 per day.”
Research from the Royal Institution of Chartered Surveyors (RICS) has established that house price rises have slowed to the slowest pace since last May due to the interest rate rises. 24.0% more Chartered Surveyors reported a rise than a fall in house prices, down from 28.0 % in January.
The pace of increases remains only just above the long run average of 21.6% as supply conditions remain tight boosted by a strong economy.
Households remain under little pressure to sell with the stock of unsold property on surveyors' books falling to the lowest level since July 2004.
Strong house price growth was once again seen in London and the South of England fuelled by an ever-booming financial services sector but there are signs of a modest slowdown. In Scotland house prices increased at their fastest pace for several months while remaining robust in Northern Ireland.
The Bank of England’s Monetary Policy Committee (MPC) maintained the interest rate base rate at 5.25% at their meeting on the 8th February. This came after their surprise move to 5.25% in January, up from 5%.
The Bank of England’s decision has been based on a target to tackle the rate of inflation. Currently, the inflation figure is at 2.7%, which is higher than the desired level of 2%.
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