UK house price growth accelerates in February

House price growth in Britain picked up speed last month, as investors sought buy-to-let properties ahead of the new tax rules, according to Nationwide figures released on Thursday.

House prices were up 4.8% in February, compared with February of last year. Growth remained steady month-on-month at 0.3% for the year to February; just under economists’ predictions of 0.5% monthly growth and 5% annual growth [1].

While Nationwide’s statistics were positive, Halifax reported a decrease of 1.4% in house prices in the last month [2], alongside a surprising annual growth rate figure of 9.7% [3].

Nationwide is confident of its data, saying it’s “more robust” than that of its rival, although both derive only from their mortgage operations, as opposed to indices from the Office for National Statistics and the Land Registry [2].

Samuel Tombs, Economist at Pantheon Macro, said the discrepancies in the data may be affected by sampling errors. “Nationwide’s measure of house prices underplays the extent to which the housing market is heating up again”, he explained, adding that “February’s sharp fall in the Halifax measure of house prices is not a convincing signal that the market is cooling” [2].

Halifax said the growth was mainly driven by low supply on the market. Housing Economist for Halifax, Martin Ellis, said: “Instructions for second-hand properties coming up for sale have increased in the past two months, and the level of housebuilding increased significantly in 2015. Further ahead, increasing affordability issues – as house price increases continue to exceed wage growth – are likely to curb housing demand and cause price growth to ease” [3].

Russell Quirk, Chief Executive of online estate agent eMoov, also said: “The impending stamp duty changes due in April have no doubt helped to keep the UK market buoyant”, indicating that the housing market will look very different after this change [2].

[1] Reuters UK. ‘UK house price growth accelerates in February, Nationwide says’.
[2] Telegraph. ‘Robust house price growth fuelled by buy-to-let and low supply’.
[3] Financial Times. ‘Halifax reports 9.7% annual UK house price growth’.