According to Nationwide Building Society UK house prices increased in February by 0.2%.  That marks the fifth successive month of data where the average house price increased rather than having declined.  The average house price recorded for February was £162,638.

The last three months of data revealed a 0.6% increase which is considered a better benchmark of showing how house prices are performing rather than a month to month comparison. 

Credit for the steady increase in house prices is being credited by many experts to the government’s Funding for Lending scheme.  The scheme allows lenders to borrow from the government to fund their loans.  This allows them to borrow for lending at a much lower interest rate than could be found from the global lending market.  The benefit of borrowing for funding at lower interest rates is that loans for borrowers are then lower.  The lenders participating in the scheme must keep funds available for borrowers and at low interest rates.  The scheme began in August 2012.

In response to the recent data, Robert Gardner, Nationwide Chief Economist, remarked, “While the economic backdrop remains challenging, there are reasons for cautious optimism that activity will gather momentum in the months ahead. In particular, employment is rising at the fastest pace since the late 1990s which, if maintained, should help support demand for homes.”

Howard Archer, HIS Global Insight Chief UK Economist, said, “The small rise in house prices in February reported by the Nationwide ties in with our view that house prices will be essentially flat over the 2013 – as extended low interest rates and the likely increasing beneficial impact of the Funding for Lending scheme in supporting mortgage lending are countered by still difficult economic conditions.

“However, it is very possible that house prices could eke out a modest gain over 2013 – although it remains hard to see house prices making any decisive move upward in 2013 given the still difficult economic environment.”