According to Nationwide, the cost of a typical UK home rose by a record £29,162 last year.
The building society said it was the largest increase in house prices since comparable data began to be collected in 1991.
It has pushed the price of the average UK home to £260,230 in February, it said.
Property values are being driven by continued demand from buyers who are competing for relatively few properties in the market.
The Nationwide, one of the UK’s largest mortgage lenders, said its data suggests that UK house prices rose 12.6% in the year to the end of February.
That was an acceleration from the 11.2% annual gain recorded in January.
House prices continue to rise sharply, although household finances are under pressure from rising costs for household energy, petrol and other necessities such as groceries.
“The continued momentum in the property market is somewhat surprising given the mounting pressure on household budgets from rising inflation, which hit a 30-year high of 5.5% in January, and since borrowing costs have been rising from historical lows in recent months said Robert Gardner, chief economist at Nationwide.
He said the economic outlook was uncertain, although it was likely the housing market would slow.
- First-time buyers step up: “I couldn’t pay the rent anymore”
- Rental costs increase as employees return to the office
Many people were reconsidering how they lived and worked during the Covid lockdowns, leading to a race for space among shoppers. In recent months there has been a significant shortage of homes on the market to meet demand, which has pushed up asking prices.
The Nationwide said the price of a typical home is 20% higher than the same month two years ago, just before the pandemic started – an increase of £44,000.
Karen Noye, mortgage expert at wealth managers Quilter, said: “For first-time buyers, these increases represent a cat-and-mouse game, with potential buyers just managing to save enough for a down payment before the cost of their first home runs out can be reached again.”
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The harsh reality of rising rents, skyrocketing inflation that continues to outpace wage growth and a lack of affordable housing has left many out of the market.”
Add Comment