Economy

UK house price growth picked up unexpectedly in February

Market defies expectations of slowdown, rising 6.9%

Photograph: iStock

Tue Mar 2 2021 - 08:11

British house price growth picked up unexpectedly last month, mortgage lender Nationwide said on Tuesday, defying expectations of a slowdown as finance minister Rishi Sunak readies new budget measures to boost the market.

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

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

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

Mr Sunak looks set to extend a temporary cut to property purchase taxes until June and announce a new mortgage guarantee scheme for first-time buyers, according to media reports.

Samuel Tombs, economist at Pantheon Macroeconomics consultancy, said he doubted any new scheme would solve affordability problems faced by first-time buyers.

“Nonetheless, our forecast for house prices to drop by about 2 per cent this year now looks too downbeat, though we’ll wait for details of the guarantee scheme to be released before providing new numbers,” Mr Tombs said. – Reuters

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