House prices rose 10.8% on an annual basis this February, shows the latest Halifax house price index.

This is the fastest rate of growth since June 2007, when house prices shot up by 11.9% on an annual basis, and it means that the average house price is currently at a record high of £278,123.

Over the last 12 months, house prices have gained an average of £27,215, which is the biggest annual gain since the index launched 39 years ago.

And since the beginning of the Covid-19 situation, February 2020, house prices have gone up by 16%, or £38,709, Halifax adds.

On a monthly basis, house prices rose in February by 0.5%, or £1,478 in value, increasing for the eighth month in a row.

Halifax managing director Russell Galley believes that high buyer demand will soften as 2022 progresses and house price growth will slow.

Quilter mortgage expert Karen Noye explains: “The invasion in Ukraine continues to shock the world and its impact will ripple throughout the UK’s economy.

“One of the main reasons this could affect house prices is due to the West turning its back on Russian energy. At a time when energy costs were already set to soar, prices may go even higher than predicted.

“Even food could get more expensive with the price of wheat also set to rocket. All this means that first-time buyers and prospective home movers simply have less cash to splash, making them think twice about embarking on the expensive process of buying a new house, which could financially destabilise them at the worst possible time.

“On top of these barriers, any deposit for a house will be continually eroded by inflation reducing people’s spending power. The Bank of England before the Ukraine conflict predicted inflation to peak at 7.25% in April, but the war may cause it to go higher and stay that way for longer.

“The only way to combat this will be to increase interest rates and naturally this will mean lenders are forced to take their cheaper mortgage deals off the shelves. This will further price people out of the market and potentially make others think twice before making a move.

“Ultimately, 2022 could see house prices slow significantly if not drop as the economy deals with the prospect of war in Europe. However, the UK suffers a significant housing problem as there simply is not enough stock. Until the shortfall is met house prices are likely to stay relatively high.”

And We Are Money founding adviser Jonathan Burridge says: “It’s important to note that this house price index looks back not forward. We have seen high property demand for over a decade and it is naïve to believe this will carry on.

He warns: “Covid has delayed the full impact of the UK leaving the EU and we are now experiencing the financial impact of the pandemic, along with a war in Eastern Europe. There is a storm brewing.”