Annual house price growth held steady at 1% in February, with average prices increasing to £273,176, the latest index from Nationwide has shown.

Month-on-month house price growth across the UK was 0.3%.

Nationwide chief economist Robert Gardner says the figures reflect January’s modest recovery after the dip at the end of last year prompted by uncertainty over Budget tax changes.

But he points out that the number of mortgages approved for house purchase remain close to the levels prevailing before the pandemic.

Gardner says: “Looking across 2025 as whole, total housing market transactions were 10% higher than in 2024.

He highlights the lender’s recent report showing, improved affordability credit availability has helped to support first-time buyer activity, with completions up 18% year on year.

Gardner says: “Home mover transactions involving a mortgage have also recovered over the past year, with activity up 15% year on year.

“There has also been a gradual increase in the number of buy-to-let purchases involving a mortgage, although activity remains quite subdued compared to historic levels, reflecting the continued headwinds impacting this part of the market.”

Gardner says that higher interest rates tend to exert more of a drag on landlord demand rather than owner occupiers, while changes to the regulatory environment have also impacted landlord sentiment.

He adds: “Housing market activity is likely to recover in the coming quarters, especially if the improving affordability trend seen last year is maintained as expected.”

SPF Private Clients chief executive Mark Harris says: “Lower mortgage rates continue to support housing market activity. 

“Enquiry levels are strong as buyers who put decisions on hold last year now feel ready to proceed, particularly as improved affordability is making them feel more confident about committing to a property purchases.”

Harris says signs of a pick-up in buy-to-let mortgage lending are also welcome, as private landlords are essential to the smooth functioning of the private rented sector.

He adds: “The chances of another interest rate cut this month have improved as unemployment rises, inflation falls and economic growth is lacklustre. 

“This will provide a welcome boost as the weather continues to improve and we move into the traditionally busier spring market.”

Quilter financial planner Ian Futcher says that, while Nationwide’s figures suggest a gradual recovery compared to the dip seen towards the end of last year, we are unlikely to see a marked uplift in house prices for a while yet. 

He says: “Residential property transactions data out last week show that despite the slight easing of mortgage rates and more competitive offerings being brought to the market by lenders, the market remains very much subdued.

“While lenders are vying for business and bringing cheaper products to the table, as well as higher loan-to-income and loan-to-value offerings, affordability is still stretched. 

“With the prospect of further rate cuts throughout 2026, many will be holding out in hopes of securing a cheaper deal later down the line.

“Until rate cuts are more clearly evidenced and there is significant downward pressure on mortgage rates, prompting more people to put moving plans back in motion, we can expect house prices to remain relatively stagnant.”