The average house price reported by Nationwide for February reached another new high. Records have been broken time after time due to the current housing market. Demand remains high and supply is short. It is heightened due to the expected interest rate increases which will make borrowing more expensive. The new record high average house price reported is £260,230.

Not only is it a new high level for the average house price in the UK, but it is the first time it has broken the £260,000 threshold.

The average house price has increased to a concerning level as it is likely closing out first time buyers. A typical home in the UK is now 20% more expensive than it was in February 2020. Deposits are difficult to save for and as prices increase so do the deposit levels. The difficulty the pandemic has put on households and rising inflation will make it even more difficult for hopeful home buyers to afford this major step to getting on the property ladder.

According to Nationwide, the average home price is 6.7 times the average wage earning.

Robert Gardner, Nationwide chief economist, remarked on the latest data, “A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.

“The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months.

“The strength is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence.”

The Bank of England’s Monetary Policy Committee (MPC) has been expected to increase the standard base rate. It would mark the third consecutive meeting resulting in an increase. The result could take the once historic low of 0.1% to a possible 0.75% since December. The fear of even more rate increases due to rising inflation will likely keep the demand high in the housing market for months to come.

There is much being discussed as to the invasion of Ukraine and whether it could cause a hold on the expected rate increase by the MPC due to the impact on energy costs for consumers. Inflation however is still on a steep climb and could last much longer due to the conflict and its duration. 

The next MPC meeting is 17 March and until then home buyers will likely be determined to seek the security and comfort offered to those that own their home before interest rates increase further.