UK house price growth steady at 3.9% – Nationwide

The housing market showed continued strength in February, with the annual rate of price rises holding firm at 3.9%, a slight dip from January’s 4.1%, Nationwide reveals.

On a monthly basis, prices edged up by 0.4%, marking the sixth straight month of gains after adjusting for seasonal trends, according to lender’s latest data.

The resurgence of activity in the property sector was evident throughout 2024, particularly in the latter half,

That’s when total housing deals surged by 14% compared to the same stretch in 2023.

Despite this uptick, the full year’s transaction tally remained 6% below the benchmarks set before the 2019 coronavirus outbreak.

Cash buying landlords

Nationwide’s chief economist, Robert Gardner, said: “First-time buyers fuelled much of the recovery, with mortgage completions in 2024 trailing just 5% behind 2019 figures — a robust showing amid elevated borrowing costs.

“Five-year fixed-rate mortgages now hover around 4.4% for those with a 25% deposit, a stark contrast to the roughly 2% rates available five years ago.

“Meanwhile, cash-funded purchases stood out, exceeding pre-pandemic volumes by 2%.”

He added: “However, it is important to note that some cash purchases are also undertaken by landlords and that activity in this space appears to have remained more buoyant.

“Higher transaction costs, as a result of recent and upcoming stamp duty changes and uncertainty relating to the regulatory environment, also appear to be having a cooling effect on this segment of the market.”

Property sector reaction

Propertymark‘s chief executive, Nathan Emerson, said: “Year on year it is positive to see progression within the housing market, and it is encouraging to see momentum continue as we head further into 2025.

“There are still aspects to be mindful of, however, such as how inflation could influence future base rate decisions and what effect on affordably that could have.

“With inflation now sitting at 3 per cent, which is above the Bank of England’s initially targeted level, we could see it becoming potentially more challenging for people to approach the buying and selling process should this translate into higher interest rates as a result.”

Matt Thompson, the head of sales at Chestertons, said: “February’s property market saw a decline in first-time buyer enquiries as the chances of finding a property in time to beat the changes to stamp duty are now nil.

“We did, however, see continuous demand from other buyer demographics; especially after the Bank of England announced a rate cut to 4.5%.

“With the news of sub-4% mortgages returning to the market, we expect more house hunters to start their search over the coming weeks.”

Iain McKenzie, the chief executive of The Guild of Property Professionals, said: “The sales market has continued to show positive momentum, with this increased activity helping to support house prices at the start of the year.

“While affordability remains a concern, along with persistent inflation, the property market is resilient, and the early months of 2025 have shown improvement compared to the same period in 2024.

“A rise in the number of homes for sale has provided buyers with more choice and negotiating power, while the influx of new buyers has further driven market activity.”

Tom Bill, the head of UK residential research at Knight Frank, said: “House price growth has come under downwards pressure this year as supply exceeds demand.

“Buyers are no longer navigating the choppy waters of double-digit inflation but they are swimming against a gentle and unpredictable current as Budget plans are implemented and the government seeks economic growth.

“We expect low single-digit house price growth this year that will hopefully surpass the rate of CPI inflation.”

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