UK house prices edged upwards in February, defying expectations of a slowdown linked to the upcoming spring budget, according to figures released by Nationwide Building Society. The average UK house price rose to £273,176 last month, a 0.3% increase from January, and exceeding analysts’ predictions of a 0.2% gain.
The modest increase marks a continuation of the trend seen in January, and leaves the annual growth rate steady at 1%. The figures suggest a resilience in the housing market, contrasting with the dip experienced in the autumn of 2025 following speculation about potential property tax changes ahead of the November budget.
Jason Tebb, president of the property website OnTheMarket, noted a shift in market sentiment. “Housing market activity and sentiment have continued to pick up this year, with buyers and sellers proceeding with their moves with more clarity and confidence, particularly as the spring forecast has not attracted anything like the same level of negative speculation as November’s budget,” he said.
The positive figures come as Chancellor Rachel Reeves prepares to present her spring forecast on Tuesday, seeking to project stability following a period of economic uncertainty. Reeves is expected to highlight progress on reducing the cost of living and assert that Labour has “the right plan” for economic recovery.
Nationwide’s chief economist, Robert Gardner, attributed the recent recovery to a “modest recovery after a dip at the end of 2025” caused by uncertainty surrounding potential property tax changes. He anticipates further improvement in the coming quarters, contingent on sustained affordability trends. Housing market transactions increased by 10% in 2025 compared to the previous year, driven in part by improved affordability and increased mortgage availability, particularly for first-time buyers.
Although, broader economic factors continue to exert influence. UK inflation, previously expected to reach the Bank of England’s 2% target by April, may face renewed upward pressure following recent US-Israeli airstrikes on Iran, which have driven up oil prices. Brent crude jumped as much as 13% in early trading, reaching $82 a barrel, raising concerns about energy costs.
Alice Haine, a personal finance analyst at Bestinvest, warned that higher energy prices could complicate the Bank of England’s efforts to bring inflation down to target. She also highlighted the challenges facing homeowners refinancing mortgages, with many rolling off low fixed-rate deals into a significantly higher interest rate environment. Approximately 1.8 million fixed-rate mortgages are set to expire this year.
Data from the Bank of England revealed a decline in mortgage approvals, falling to 59,999 in January – the lowest level in two years. Net borrowing of mortgage debt by individuals also decreased, dropping to £4.1 billion in January from £4.5 billion in December, despite a slight fall in the effective interest rate on new mortgages to 4.09%.
