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House prices in the UK rose in February, with the market showing resilience as Chancellor Rachel Reeves prepares to deliver her spring forecast this week.
Data from Nationwide revealed that the average property price increased by 0.3% month-on-month to £273,176, matching January’s rise and surpassing economists’ expectations of a 0.2% increase. On an annual basis, prices grew by 1%, maintaining a steady pace of growth.
Market Confidence Holds Steady
Unlike the period leading up to last November’s budget — when speculation over potential property tax changes dampened buyer confidence — the upcoming spring forecast has not triggered similar uncertainty.
Jason Tebb, president of property website OnTheMarket, said activity and sentiment have strengthened this year, with buyers and sellers moving forward more confidently. He noted that the spring forecast has not generated the same level of negative speculation that unsettled the market before the autumn budget.
Signs of Recovery After Late-2025 Dip
Robert Gardner, Nationwide’s chief economist, described the figures as evidence of a modest rebound following a slowdown at the end of 2025. That earlier dip was largely attributed to uncertainty surrounding possible tax changes.
Gardner suggested housing activity could continue to improve in the coming months, particularly if affordability continues to trend positively. He highlighted that housing transactions rose 10% last year compared with 2024, supported by easing mortgage availability and better affordability conditions, which have helped first-time buyers re-enter the market.
Interest Rate Expectations Shift
Earlier projections indicated that UK inflation would fall to the Bank of England’s 2% target by April, potentially opening the door to another interest rate cut amid rising unemployment, weak economic growth, and slowing wage increases.
However, those expectations were tempered after geopolitical tensions pushed oil prices sharply higher. Following US-Israeli airstrikes on Iran, Brent crude surged by as much as 13%, reaching $82 a barrel. As a result, financial markets reduced the likelihood of a March rate cut from 80% last week to just over 71%.
Alice Haine, a personal finance analyst at Bestinvest, warned that higher energy costs could complicate efforts to reduce inflation. She also noted that around 1.8 million homeowners with fixed-rate mortgages will see their deals expire this year. Many will move from ultra-low five-year fixed rates to significantly higher borrowing costs, placing added strain on household finances.
Although borrowers face steeper repayments, Haine suggested they can take some reassurance from having avoided the peak of the recent mortgage turmoil.
Outlook
With steady price growth, improved affordability, and reduced policy uncertainty, the housing market appears to be stabilising. However, external pressures such as energy price volatility and geopolitical risks could influence inflation and interest rate decisions in the months ahead.
