A “delicate balance” was seen in the property market in February, with the average house price dipping by £213 month-on-month, according to an index. Property values fell by 0.1% on a monthly basis, taking the average house price in February to £298,602.
Steady annual house price growth was maintained at 2.9%, consistent with what was recorded in January. Amanda Bryden, Halifax’s head of mortgages, said: “February’s figures highlight the delicate balance within the UK housing market. While there’s been talk of a last-minute rush on new mortgages ahead of the changes to stamp duty, inevitably, we’ve seen some of the demand that was brought forward start to fade as the April deadline ticks closer, given the time needed to complete a purchase.”
Changes in April will decrease stamp duty discounts for certain homebuyers, with the tax applying to properties in England and Northern Ireland. Ms Bryden continued: “While house price growth has slowed overall, market activity remains strong and comparable to pre-pandemic levels, demonstrating a resilience among buyers that’s been evident in the face of higher borrowing costs.”
She added: “While those affordability challenges persist, the ongoing shortage of housing supply coupled with sustained demand suggests property prices will continue to rise this year, albeit at a more measured pace compared to last year.”
Andrew Montlake from Coreco Mortgage Brokers said: “There is no shortage of economic headwinds facing the property market, and affordability is a constant challenge for many buyers, but it remains as hardy as ever.”
He added: “The hope is that the rise in inflation is brief and that the (Bank of England) base rate can be brought down sooner rather than later. Another rate cut or two this year would be a massive tonic for bricks and mortar.”
Tom Bill of Knight Frank weighed in on market dynamics, noting: “Despite a rush to complete ahead of the stamp duty increase in April, supply outpaced demand in the first two months of this year, which kept downward pressure on house prices. We expect low single-digit house price growth this year, but the outlook is changeable.”
Commenting on the mortgage market, Iain McKenzie from the Guild of Property Professionals explained that despite higher-than-expected CPI inflation, the Bank of England reduced the base rate to 4.5% in early February, prompting several major banks to follow suit.
He said: “This comes as a welcome relief after fixed-rate mortgage rates rose in early 2025, with some lenders reversing the cuts made in late 2024 following gilt yield spikes. Now, this trend appears to be shifting, with the lowest fixed-rate mortgages dipping below 4% for the first time in months as competition among lenders intensifies.”
Holly Tomlinson, a financial planner at wealth manager Quilter, has sounded the alarm over housing affordability, remarking: “Affordability remains stretched, and economic uncertainty, both domestic and global, continues to weigh on sentiment. The housing market has been banking on rate cuts this year, but if inflation stays sticky, borrowing costs could stay higher for longer, slowing house price growth or even pushing prices down in real terms.”
Ms Tomlinson suggested: “The next few months will be crucial in setting the housing market’s direction. The housing market could see renewed momentum if inflation can be controlled and the Bank of England presses ahead with rate cuts. However, persistent inflation, higher mortgage rates, and global trade tensions could dampen demand and keep price growth subdued.”
Mark Harris, CEO of mortgage broker SPF Private Clients, commented: “Swap rates have been declining slowly, enabling several lenders including Nationwide and Barclays to reintroduce those psychologically-important sub-4% mortgages. However, the market remains jittery and with swaps jumping again over the past couple of days, wiping out much of the recent declines, the cheapest deals may not hang around for long.”
Matt Thompson, Head of Sales at London-based estate agent Chestertons, observed: “In February, the property market saw a higher volume of inquiries from parents who are looking for a property in catchment areas of highly-rated state schools. This resulted in larger-family homes attracting interest from multiple buyers.
“With the introduction of sub-4% mortgages, we also witnessed growing buyer confidence amongst second steppers and, despite to the looming changes to stamp duty, still registered a number of first-time buyers who are eager to get on the property ladder.”
Here are the average house prices in February, along with the annual increase, as reported by Halifax (the regional annual change figures are based on the most recent three months of approved mortgage transaction data):
- London, £545,183, 1.6%
- South West, £306,206, 2.0%
- Eastern England, £337,466, 2.2%
- South East, £393,717, 2.2%
- North East, £176,621, 2.9%
- Wales, £226,811, 2.8%
- West Midlands, £262,111, 2.8%
- East Midlands, £246,919, 3.4%
- Scotland, £213,014, 3.8%
- North West, £240,328, 3.9%
- Yorkshire and the Humber, £216,130, 4.1%
- Northern Ireland, £205,784, 5.9%