Houses prices edge ahead in February - Nationwide

House prices nudged higher in February, marginally ahead of forecasts, as the strong labour market helped balance out some of the uncertainty around Brexit.

Annual house price growth was 0.4% in February, according to the Nationwide house price index. That was an improvement on January’s 0.1%, close to a six-year low, and above most economists’ expectations of 0.3%.

The seasonally adjusted measure saw house prices fall 0.1% month-on-month, however.

Robert Gardner, Nationwide’s chief economist, said: “Indicators of housing market activity, such as the number of property transaction and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but survey data suggests that sentiment has softened.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Year-on-year growth remained well below last year's average rate of 2.1% in February, but we doubt it will sink much lower.

“Brexit uncertainty is prompting some potential homebuyers to delay purchases, but the pick-up in the UK Finance measure of mortgage approvals in January suggests the aggregate impact has been modest so far. The wider economic picture remains supportive of house prices: the unemployment rate is a 43-year low, wage growth has picked up and mortgage rates remain very low.”

Pantheon Macroeconomics is forecasting house prices to rise by 1.5% during 2019, although it conceded that most of the increase will be concentrated in the second half of the year.

Howard Archer, chief economist at the EY ITEM Club, said: “Brexit and economic uncertainty may now be having an increased dampening effect on housing market activity. [It] is also being limited by still relatively limited consumer purchasing power - despite some recent improvement - fragile consumer confidence and, very possibly, wariness over higher interest rates.”

The EY ITEM Club is forecasting house prices to rise 2% in 2019, but warned they could fall 5% in the event of a no-deal Brexit.