House price growth fell back again in February

Emma Haslett
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House price growth in the UK is slowing (Source: Getty)

Growth in UK house prices fell back in February - suggesting January's surprise spike was a short-term rise, rather than the beginning of a permanent recovery in growth.

Prices rose 2.2 per cent in the year to February, down from a 3.2 per cent the month before, figures by Nationwide showed.

Between January and February, prices fell 0.3 per cent, to an average of £210,402.

The figures echo research by the Centre for Economics and Business Research published earlier this week, which suggested consumer confidence in house prices rising has fallen to the lowest levels since the Brexit referendum.

“How the housing market performs in the year ahead will be determined in large part by developments in the wider economy and the path of interest rates," said Robert Gardner, Nationwide's chief economist.

"Brexit developments will remain a key factor, though these remain hard to foresee. We continue to expect the UK economy to grow at modest pace, with annual growth of one per cent to 1.5 per cent in 2018 and 2019.

"Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, added: "We expect house price growth to slow even further over the coming months.

"New buyer enquiries fell for the 10th consecutive month in January, according to RICS, while house hunter numbers were down 14 per cent year-over-year, according to the National Association of Estate Agents.

"Moreover, mortgage rates, which have only edged up so far, look set to rise sharply as banks respond to the rise in wholesale funding costs since the start of this year and the closure of the Term Funding Scheme.

"Broadly flat prices wouldn’t be a disaster for the economy, but they would damage consumers’ confidence and persuade them to raise their saving rate, preventing the upturn in real incomes this year from lifting GDP growth."

Read more: Revealed: These are the UK cities with the highest house price growth

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