House prices see first annual rise in over a year

Property prices have risen on an annual basis for the first time in a year, according to the Nationwide, but are still below their peak.

The UK's largest building society said house prices were up 1.2% in February compared with a year ago.

Signs of activity have been seen in the UK housing market, with Bank of England figures on Thursday showing a rise in mortgage approvals.

But the Nationwide said the outlook was still "highly uncertain".

"The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market," said Robert Gardner, Nationwide's chief economist.

"Nevertheless, near-term prospects remain highly uncertain, in part due to ongoing uncertainty about the future path of interest rates."

On a month-on-month basis, house prices increased by 0.7% in February, according to the Nationwide's data, taking the average UK house price to £260,420.

However, it said that property prices remained 3% lower than their peak during the summer of 2022.

The Nationwide is one of the UK's biggest mortgage lenders. Its figures only take into account buyers with mortgages and do not include those who purchase homes with cash or buy-to-let deals.

According to the latest available official data, cash buyers currently account for over a third of housing sales.

Rising house prices at a time of relatively high mortgage rates may prove to be a problem for potential first-time buyers, who may look for government help when Chancellor Jeremy Hunt delivers his Budget on Wednesday.

However, analysts say some moves to boost the housing market can lead to house prices rises accelerating, and could drive up inflation.