UK House Prices Show First Annual Increase in Over a Year

Nationwide Building Society report reveals positive trend in February, signaling potential housing market recovery after declining mortgage costs.

The UK house prices saw a positive trend in February, marking the first annual increase in over a year, according to a report by mortgage lender Nationwide Building Society released on Friday. This development signals a potential recovery in the housing market following a period of declining mortgage costs.

The report revealed that house prices in February 2023 were 1.2% higher compared to the same period last year, representing the first annual rise since January 2022. Additionally, prices experienced a monthly increase of 0.7% between January and February this year.

Nationwide Building Society's price gauge now stands just 3% below the all-time peak reached in the summer of 2022, shortly before the housing market was impacted by the Bank of England's decision to raise interest rates and the ensuing bond market turmoil during former Prime Minister Liz Truss's tenure. Over the three months leading up to the end of February, prices surged by 1.2%, marking the fastest growth rate since July 2022.

The Bank of England opted to maintain its key borrowing rate at 5.25% last month, the highest level since 2008. However, the central bank hinted at a potential rate cut in the near future as inflation approaches its 2% target. Mortgage rates have been on a downward trajectory in anticipation of the Bank of England's next move. Notably, the Bank of England reported that mortgage approvals in January reached their highest level since October 2022.

The recent uptick in the UK house prices, along with the potential for a rate cut by the Bank of England, suggests a positive outlook for the housing market in the coming months.