Property values moving further out of reach as upward price pressures continue

house price growth soared to a whopping 12.6 per cent in February, with the price an average home increasing by 1.7 per cent to over £260,000 for the first time. This was beyond what was anticipated by analysts, but the end of COVID restrictions triggered by the Omicron variant, together with the threat of several interest rate hikes by the Bank of England this year prompted buyers to secure homes last month. Several other factors, including a fall in offers for fixed-rate mortgages as a result of stiff competition between mortgage lenders, were also driving prices higher.
Accordingly, the average British house price in February reported the biggest annual increase of almost £30,000 to reach a whopping £260,230, Nationwide said. In terms of growth since pre-pandemic levels, the price of a typical home in the European nation increased by £44,140, from February 2020, shortly before the first COVID lockdown was imposed in the UK. According to the Swindon-based building society, housing affordability has now become stretched, with house price growth outpacing wage increases. A typical home in the country is now about 6.7 times average earnings, Nationwide revealed.
“The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months,” Robert Gardner, Nationwide’s chief economist, said, but added that robust demand, together with limited stock of homes on the market are keeping upward pressure on prices.