The Nationwide House Price Index in the UK rose by 3.9% year-on-year in February 2025, slightly lower than the 4.1% increase observed in January, but still well above market forecasts of 3.3%.
UK house prices rise 3.9% YoY in February
This continued growth indicates that, despite the economic headwinds, the housing market remains relatively resilient. On a monthly basis, house prices grew by 0.4%, up from 0.1% in the previous period, and significantly exceeding the forecasted 0.2% growth. This monthly uptick suggests that the housing market is seeing renewed momentum, potentially driven by factors such as ongoing demand, limited housing supply, and the impact of prior policy measures.
Expert comment
Nationwide's Chief Economist, Robert Gardner, noted that "housing market activity has also remained resilient in recent months, despite ongoing affordability challenges." He highlighted that the second half of 2024 saw a notable recovery in housing transactions, which were up by 14% compared to the same period in 2023. This increase in transactions signals that buyers and sellers are continuing to engage in the market, despite the affordability pressures caused by higher mortgage rates and living costs. The resilience in housing activity could also be reflective of the fact that the housing market has been adjusting to the new economic landscape, with people still motivated to move for various reasons, including changing lifestyle needs or capitalizing on lower prices compared to the post-pandemic boom.
What to expect
Looking ahead, Gardner pointed out that upcoming changes to stamp duty at the start of April could generate significant volatility in housing transactions. The stamp duty adjustments, which will likely increase the tax burden on certain property transactions, could prompt buyers to accelerate their purchases before the tax change takes effect. This rush to complete transactions before the new rules come into force may lead to a spike in housing activity in March, as buyers move quickly to avoid the additional costs. However, following this potential surge in activity, the market could experience a corresponding dip in transactions in the months after April, similar to the patterns observed after previous stamp duty changes.
Overall, while the housing market in the UK is facing some headwinds, the continued rise in house prices and the pick-up in transactions in recent months indicate that the market is more resilient than many expected. However, as the impact of stamp duty changes and broader economic conditions continue to unfold, there could be short-term fluctuations in housing activity that will require close monitoring.
