Nationwide data points to steady monthly gains
UK house prices edged higher in February, offering an early signal that the housing market has not been unsettled by pre budget speculation to the same extent seen late last year. With Chancellor Rachel Reeves due to present the spring forecast on Tuesday, the latest pricing data suggests buyers and sellers have continued to transact without a fresh wave of uncertainty weighing on sentiment.
Nationwide, the UK’s largest building society, said the average home price rose to £273,176 in February. That was a 0.3% increase from the previous month, matching the pace recorded in January and coming in above forecasts for a 0.2% rise. On an annual basis, Nationwide said price growth held steady at 1%.
The figures arrive as the government prepares to publish updated projections from the independent Office for Budget Responsibility. Reeves is expected to deliver a short statement to parliament and emphasize progress on lowering living cost pressures, while arguing Labour has the right plan for improving the economy. The absence of a visible pre announcement slowdown in prices contrasts with the period ahead of last November’s budget, when speculation about possible property tax changes unsettled the market.
Budget speculation fades, supporting activity and confidence
Industry executives said a calmer policy backdrop has helped momentum build into the early part of the year. Jason Tebb, president of property website OnTheMarket, said activity and sentiment have continued to improve, with buyers and sellers moving ahead with greater clarity and confidence. He added that the spring forecast has not attracted anything like the negative speculation that circulated before the November budget.
Nationwide Chief Economist Robert Gardner described the latest pricing trends as consistent with a modest recovery following a dip at the end of 2025. He linked that earlier weakness to uncertainty around potential property tax changes before the budget. Gardner said activity could strengthen further over coming quarters, particularly if affordability continues to improve as expected and if mortgage availability keeps easing.
Transaction levels have already shown signs of resilience. Gardner said housing market transactions rose 10% last year compared with 2024. He also said improving affordability and an easing in mortgage availability have supported first time buyer activity, and that first time buyers are expected to be an important driver of sales this year.
Rate cut expectations shift after oil shock
Financial market pricing has also been influenced by changing inflation risks. Investors had expected UK inflation to move toward the Bank of England’s 2% target by April, potentially opening the door to another interest rate cut against a backdrop of rising unemployment, weak growth, and slowing wage increases. That view shifted on Monday as oil prices jumped following US Israeli airstrikes on Iran and fears of supply disruption.
Brent crude, the global benchmark, rose as much as 13% in early trading and reached $82 a barrel. The move pushed down the implied probability of a Bank of England rate cut in March. The odds fell to 50% on Monday, from 80% a week earlier, reflecting concern that higher energy costs could make it harder to bring inflation down quickly.
Alice Haine, a personal finance analyst at Bestinvest, said higher energy prices would complicate the inflation path and could affect household budgets through borrowing costs. She pointed to the refinancing pressure facing borrowers whose fixed rate deals are ending. Around 1.8 million fixed rate mortgages are due to expire this year, and many households are moving from ultra low five year fixed deals into a far higher rate environment. Haine said that shift will squeeze disposable incomes, even as borrowers can take some comfort from avoiding the worst phase of the mortgage crisis.
Mortgage data shows cooling approvals despite lower rates
Separate Bank of England figures published Monday showed a slowdown in new lending approvals at the start of the year. The number of new mortgages approved fell to 59,999 in January, the lowest level in two years. The data suggests demand for new borrowing remains cautious, even as the cost of new mortgages eased slightly.
The Bank of England said the effective interest rate on newly issued mortgages declined to 4.09% in January from 4.15% in December. Even small changes in headline mortgage pricing can influence affordability calculations, but the drop did not prevent approvals from falling, indicating that uncertainty around rates, incomes, and broader economic conditions may still be restraining decisions.
Borrowing volumes also softened. Net borrowing of mortgage debt by individuals decreased to £4.1 billion in January from £4.5 billion in December. That pullback sits alongside the steady house price gains recorded by Nationwide, reinforcing a picture of modest price growth supported by existing market activity, but with new borrowing demand showing signs of caution as households and lenders prepare for the next phase of the rate cycle.
