Annual house price growth rebounded to 6.9% in February, up from 6.4% in January, with the average price of a house reaching its highest level on record.
According to Nationwide's House Price Index, the average price of a house in the UK is now £231,061 ($320,897), with prices seeing a 0.7% month-on-month bump at the start of 2021, erasing declines seen in January.
The growth came above forecasts. A Reuters poll of economists had pointed to a slowdown to 5.6%.
Robert Gardner, Nationwide's chief economist, said: “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)."
Gardner said that it could be that the stamp duty holiday is providing forward momentum and that shifts in housing preference were providing a more significant boost to demand, in spite of an uncertain economic outlook.
Nick Barnes, head of research at Chestertons, said: “February’s sales were largely driven by buyers rushing to meet the stamp duty holiday deadline.
"Buyer confidence was further boosted by the well-organised vaccine rollout, the gradual easing of lockdown restrictions and people’s general desire to return to some form of normality. As a result, Chestertons saw a 78% increase in sales compared to the same period in 2020 and a 56% increase compared to January this year.”
Others put the improvement in the market down to an improvement in the "quality of buyers" with more willing to commit as well as being more realistic with their price expectations.
“The introduction of 95% loan-to-value Government-backed mortgages for first time buyers will also increase demand," said Stuart Aikman, co-founder of the prime central London estate agency, Story of Home.
Those in the market will be looking to Wednesday's budget in anticipation of further support, with recent surveys showing that the majority of homebuyers in the UK saying they would like to see stamp duty cut for good.
There has been speculation that chancellor Rishi Sunak will extend the stamp duty holiday, which is due to close at the end of this month.
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