House price growth edges up to 1.2%: UK HPI

Average UK house prices increased by 1.2%, to £268,000, in the 12 months to February, up from 1.0% in the year to January, the latest UK House Price Index from the Land Registry shows.

Average house prices increased by 0.8% in England, 2.5% in Wales, and 2.3% in Scotland.

Yorkshire and the Humber was the English region with the highest house price inflation, at 3.9%, up from 2.9% in the 12 months to January.

Annual house price inflation was lowest in London. Prices fell by 3.3% in the year to February, compared with a fall of 1.9% in January. This is the seventh consecutive month where London has seen an annual fall in house prices and the lowest annual change since January 2024 (3.5%).

Chris Storey, chief commercial officer at Atom Bank, commented: “This data represents the calm before the storm, as it predates the conflict in the Middle East and the resulting turbulence. Future data from the ONS will reveal the true impact of the conflict on house prices, and whether it has acted as a brake on the growth seen this month. Thankfully, things are beginning to settle, with Moneyfacts last week reporting the first drop in mortgage rates since the start of the war in Iran, good news for aspiring buyers.

“Those would-be buyers should steel themselves for a painfully slow journey, however. The latest data from Propertymark shows 43% of transactions taking 17 weeks to reach completion, the highest proportion since it started tracking the data in 2015. It’s extraordinary that the housebuying process still takes so long, creating stress for all involved. As an industry, we must continue to look for ways to streamline that process, providing greater peace of mind to brokers and their customers.”

Verona Frankish, CEO of Yopa, said: “Whilst the rate of house price growth remains fairly modest, the fact that prices are still moving in the right direction demonstrates that the market continues to hold firm despite a tougher economic backdrop.

"Buyers have spent the last year adapting to a world of higher borrowing costs and greater uncertainty and, as a result, we’re now seeing a far more stable and sustainable market emerge, built on realism rather than rapid price inflation.”

Ian Futcher, financial planner at Quilter, added: "The UK House Price Index for February gives a pre-shock snapshot of a housing market that was broadly stable before the sharp deterioration in mortgage affordability seen more recently, with pricing still being supported by relatively manageable borrowing costs at the time.

"February predates the escalation of the conflict in Iran, which subsequently pushed up energy prices, inflation expectations and swap rates, forcing lenders to reprice mortgages rapidly through March and early April.

"That said, there are tentative signs that the worst of the mortgage rate spike may have passed. In recent weeks, several major lenders have begun to trim fixed rates as wholesale funding costs have eased back, providing some marginal relief for borrowers. While rates remain well above February levels, pricing appears to have stabilised for now rather than continuing to rise.

"Even so, changes in mortgage costs do not feed through to house prices immediately. The sharp rise in borrowing costs seen after February is more likely to weigh on activity and sentiment in the spring and early summer data, particularly among first time buyers and more rate sensitive parts of the market.

"Looking ahead, the outlook for house prices will depend largely on how geopolitical risks evolve. If tensions ease further and energy driven inflation pressures recede, mortgage rates could continue to edge lower, supporting broadly flat prices rather than a sharp correction. If volatility returns, affordability constraints are likely to reassert themselves, leading to weaker transaction volumes and softer prices as the year progresses.

"For households with mortgages due to mature later this year, recent weeks have underlined how quickly global events can feed through into borrowing costs. While pricing has improved at the margin, the market remains fragile. Securing a rate early can provide certainty in an unpredictable environment, while still allowing borrowers to benefit if conditions improve further."