Annual house price rebounded from 6.4 per cent in January to 6.9 per cent in February, the latest figures from Nationwide reveal.

The average house price reached £231,061, the highest figure on record.

Month-on-month prices increased by 0.7 per cent, more than erasing the 0.2 per cent dip in January. 

Nationwide’s chief economist Robert Gardner says “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.”

He adds: “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.”

Trussle head of mortgages Miles Robinson says: “UK house prices have unexpectedly increased month-on-month, which suggests that the stamp duty holiday is still providing some momentum within the market. 

“It’s now expected that Rishi Sunak will extend the tax break by three months in the Budget tomorrow, so buyers may be pushing forward with their purchases to benefit from the tax relief. 

“However, our research shows that the economy could benefit from a £28bn injection if the government considered a tapered ending to the stamp duty holiday rather than sticking to a hard stop.

“This would involve guaranteeing the tax break to buyers who received a mortgage offer, for example before February 1, helping to avoid the collapse of property chains dependent on the savings from the holiday to complete. 

“Extending the deadline by three months will only delay the current cliff-edge deadline that the market faces, and will continue to pose a risk to property transactions later down the line.

The Budget is tomorrow, and we’re calling on the government to consider taking another look at how to bring the scheme to an end.”