The Nationwide House Price Index for February 2021 shows annual house price growth rising to 6.9% from 6.4% in January.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist said:

“February saw the annual rate of house price growth rebound to 6.9%, from 6.4% in January. House prices rose by 0.7% month-on-month, after taking account of seasonal effects, more than reversing the 0.2% monthly decline recorded in January.

“This increase is a surprise. It seemed more likely that annual price growth would soften further ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.

“While the stamp duty holiday is not due to expire until the end of March, activity and price growth would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).

“It may be that the stamp duty holiday is still providing some forward momentum, especially given the paucity of properties on the market at present. Shifts in housing preferences may also be providing a more significant boost to demand, despite the uncertain economic outlook.

“Many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.

“As a result, the outlook for the housing market is unusually uncertain. There is scope for shifting housing preferences to continue to boost activity, especially if there is further policy support in the Budget. Nevertheless, if labour market conditions weaken as most analysts expect, it is likely that the housing market will slow in the months ahead.”

In other reaction, Lucy Pendleton, of James Pendleton, noted:

“It is counterintuitive that prices haven’t cooled rapidly ahead of the stamp duty holiday deadline but buyers have been pretty canny.  They cottoned onto the Chancellor’s awkward dilemma quicker than they’ve been given credit for and have been banking on him choosing not to steal defeat from the jaws of victory by bringing the hammer down on their fingers.

“If the stamp duty holiday is extended, then get ready for Round Two of the Sunak Surge because the market is already telling us it’s ready to enjoy a second wind but this may happen whatever the outcome of the Budget.”

Nicky Stevenson, M.D. of Fine & Country said: “Record high agreed sale prices are a sign that the market is still being buffeted by the unshakeable desire of many to move to larger, more spacious and more expensive homes. For these buyers, the prospect of losing out on the maximum £15,000 stamp duty tax break just isn’t so important and these properties will continue to skew the overall picture for at least the next couple of months due to their price tag.”

Marc von Grundherr of Benham & Reeves referred to the news we all expect to hear later today: “With a potential stamp duty extension on the cards, we can expect buyer demand levels to remain robust and the rate of house price growth to keep climbing as we gradually emerge from our lockdown boltholes.”