Rapid cash

House prices rise by £29,000 in biggest cash jump on record

Nationwide’s Robert Gardner said: ‘This is the largest ever annual increase in cash since our monthly index began in 1991.’

Andrew Montlake, of mortgage broker Coreco, said: “Even though rates are rising, we are still in an extremely low interest rate environment with fierce competition between lenders, and this will continue to generate some level of transactions. .”

The pace cannot be sustained, he warned: “Don’t expect this pace of growth to continue, as there are countless headwinds ahead.

Homes cost £44,138 more than in February 2020 – a 20% increase since the start of the pandemic.

Monthly growth jumped to 1.7%, equating to a gain of nearly £5,000 in a single month. This is a significant increase from January, when the monthly change was 0.8%.

Analysts expressed surprise at the pace of growth amid rapidly rising inflation, the cost of living crisis and rising mortgage rates.

“The strength is particularly noteworthy since the squeeze on household incomes has led to a significant weakening in consumer confidence,” Gardner said.

He warned that this level of growth would not continue. “It’s likely that the housing market will slow down in the coming quarters,” Gardner said.

The war in Ukraine and the resulting jumps in oil and energy prices will push inflation even higher and increase pressure on household finances. Meanwhile, the Bank of England is expected to continue raising interest rates.

Consultancy firm Capital Economics has predicted the Bank Rate to reach 2% in 2023. “This will put further drag on the market if it affects mortgage rates. Housing affordability has already become more strained,” Gardner said.

Rapidly growing house prices mean the average home now costs 6.7 times the average wage, up from 5.8 in 2019.

In the short term, however, the war could still stimulate activity. Lucy Pendleton, of James Pendleton’s estate agents, said soaring inflation in the wake of the Ukraine crisis would be key.

“This should weigh on house price growth nationally over the coming months, particularly in areas that have seen the largest increases over the past year and a half, but it will also encourage potential buyers to advance their plans to beat higher borrowing costs,” she said.

Andrew Wishart of Capital Economics said: “We expect rising mortgage rates and slowing inflation on household finances to dampen house price growth later this year.”