UK house prices unexpectedly rose last month as recent reductions in mortgage rates and improving consumer confidence helped boost demand, according to the latest Halifax House Price Index.
Prices rose 1.1% between January and February, a surprise swing to positive and ahead of City forecasts for a 0.3% fall. House prices were up 2.1% compared with February 2022.
“Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices,” said Kim Kinnaird, director at Halifax Mortgages.
“Still, with the cost of a home down on a quarterly basis, the underlying activity continues to indicate a general downward trend,” she added.
“With average house prices remaining high housing affordability will continue to feel challenging for many buyers,” she continued.
The figures are in contrast with data released earlier in the month by the mortgage provider Nationwide, which reported that house prices fell on the month.
The EY ITEM Club said "a 1.1% month-on-month rise in Halifax’s measure of house prices contrasted with a fall in Nationwide’s gauge, suggesting that the housing market is bearing up better under the pressure of higher mortgage rates and offering another sign that the economy is demonstrating an unexpected degree of resilience".
But it cautioned: "It’s also hard to see momentum in prices being maintained. Mortgage rates have come down in the last few months but are still much higher than a year ago. Meanwhile, households’ ability to take on and service debt is being squeezed by falling real incomes, and widespread predictions of a decline in property values will likely encourage some potential buyers to delay purchasing, weighing on demand."