February boost for UK house prices, says Nationwide

UK house prices in the enjoyed a February boost, rising 4.5 percent according to research by Building Society Nationwide (LON:CEBB).

Nationwide said that the average UK house price was now at £205,846, following 0.6 percent of growth for the month of February, compared to the start of the year. Despite the growth, the building society projected a 2 percent rise for house prices over the course of 2017 remaining “uncertain” in its outlook for the market.

“We, along with most other forecasters, expect the UK economy to slow through 2017 as heightened uncertainty weighs on business investment and hiring,” Robert Gardner, Nationwide’s chief economist commented.

“Consumer spending, a key engine of growth in recent quarters, is also likely to be impacted by rising inflation in the months ahead as a result of the weaker pound.

“Nevertheless, in our view a small rise in house prices of around 2% is more likely than a decline over the course of 2017, since low borrowing costs and the dearth of homes on the market will continue to support prices”, he added.

Elsewhere in the property market, housing developer Barratt Developments (LON:BDEV) and Taylor Wimpey (LON:TW) reported strong annual figures encouraged by rising house prices and consistent demand.

However, the usually buoyant London housing market has notably slowed amid continued Brexit-related economic uncertainty, with house prices in the capital falling to 6.4 percent in January. 

This follows speculation that the devaluation of the pound, which has dropped by more than 18 percent against the dollar since June, may encourage exploitation from foreign investors in London property. According to the Beauchamp Estates’ 2017 Wealth Report, which covers the higher end of the global residential property market, favorable currency movements may indeed regenerate renewed interest in London.

London house prices already show a marked discrepancy with other locations across the UK, with the average house price reaching £581,825, well ahead of the second highest average for the South-West of £373,915.