Annual house price growth held steady at 1% in February, with average prices rising to £273,176, Nationwide’s latest index shows.
Month-on-month house price growth in Britain was 0.3%.
National Chief Economist Robert Gardner says the figures reflect January’s modest recovery from the dip late last year, prompted by uncertainty over tax changes in the budget.
But he points out that the number of mortgages approved for home purchases remains close to pre-pandemic levels.
Gardner says: “Looking at 2025 as a whole, total housing market transactions were 10% higher than in 2024.
He points to the lender’s recent report showing that improved credit availability has helped support first-time buyer activity, with completions up 18% year on year.
Gardner says: “Removal 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 buy-to-let purchases involving a mortgage, although activity remains relatively subdued compared to historical levels, reflecting the ongoing headwinds impacting this part of the market.”
Gardner says higher interest rates tend to put more pressure on landlord demand than on residential property residents, while changes in the regulatory environment have also affected landlord sentiment.
He added: “Housing market activity is likely to recover in the coming quarters, especially if last year’s improving affordability trend continues as expected.”
Mark Harris, CEO of SPF Private Clients, said: “Lower mortgage rates continue to support housing market activity.
“The number of inquiries is high as buyers who postponed decisions last year now feel ready to move forward, especially as improved affordability makes them feel more confident about purchasing property.”
Harris says signs of a recovery in buy-to-let mortgages are also welcome, as private landlords are essential to the smooth functioning of the private rental sector.
He added: “The chances of another rate cut this month have increased as unemployment rises, inflation falls and economic growth is subdued.
“This will provide a welcome boost as the weather continues to improve and we enter the traditionally busier spring market.”
Quilter financial planner Ian Futcher says that while Nationwide’s figures indicate a gradual recovery compared to the dip at the end of last year, we are unlikely to see a marked increase in house prices for a while.
He said: “Residential transaction data from last week shows that despite some easing in mortgage rates and more competitive offers being brought to market by lenders, the market remains very subdued.
“While lenders compete for business and bring cheaper products to market, as well as higher loan-to-income and loan-to-value offerings, affordability is still under pressure.
“With the prospect of further rate cuts in 2026, many will hold out in the hope of getting a cheaper deal later.
“Until rate cuts become more visible and there is significant downward pressure on mortgage rates, causing more people to restart their moving plans, we can expect house prices to remain relatively stagnant.”