UK house prices rose in February as the real estate market warmed up.

According to data from the Nationwide Building Society, house prices in the UK rose again in February, despite a challenging economic environment and upcoming tax increases. The average house price increased by 0.4% compared to the previous month, reaching 270,493 (approximately $340,290), which exceeded economists' expectations of 0.2%. Data from lending institutions shows that prices have been rising continuously for six months. At the beginning of this year, economic growth stagnated, but the data for February indicate that, despite overall economic challenges, prices have rebounded. The UK's GDP has remained almost flat in recent months, and the Labour government announced in October a tax increase of over 400 billion, most of which will be used for businesses starting in April, further eroding consumer confidence. In addition, stamp duty (a controversial tax on real estate transactions) is also set to increase in April. Chief economist of the Nationwide Building Society, Robert Gardner, stated, "This could lead to a surge in transactions in March, followed by a corresponding period of weakness in the coming months." The data from the institution shows a 3.9% increase in house prices in February when looking at the annual rate. In the past 12 months, house prices have risen in 9 of those months. According to the building society, cash buyers were a particularly strong group in the real estate market last year, with transactions volume 2% higher than before the pandemic. This group is not influenced by borrowing costs, and although the Bank of England has relaxed its policies, borrowing costs are still relatively high by recent standards. Data from Moneyfacts shows that the average interest rate for a two-year fixed mortgage is 5.4%. It is worth noting that one of the UK's largest developers expects to sell more homes by 2025, providing some relief for homebuilders after two challenging years. Taylor Wimpey Plc issued a statement on Thursday, stating that it expects to sell 10,400 to 10,800 homes this year (excluding joint ventures), with about 45% of sales occurring in the first half of the year. The company stated that this would be a slight improvement from the 9,972 homes sold in the UK in 2024 and reflects a "good supply of mortgages." Nevertheless, this figure is still lower than the approximately 14,000 homes sold in 2021 (the last year before mortgage costs started to rise). CEO Jennie Daly stated in the announcement, "The spring sales season has started strongly, and we see strong housing demand. Affordability, although still a challenge for many, particularly first-time buyers, is moving in the right direction." In fact, homebuilders have been under pressure from rising mortgage costs, affecting demand. According to a survey released by Knight Frank this month, about a third of developers said they could only build half of their target of 300,000 homes in the UK this year. Taylor Wimpey reported that as of February 23, its weekly net private sales rate had increased to 0.75 from 0.67 in the same period last year. The builder's cancellation rate has risen from 12% to 16% compared to the same period last year. The company also reported that "construction cost inflation is moderate," expected to remain in the low single digits this year, slightly accelerating after a cooling period following rapid price increases post-pandemic. Quilter Cheviot analyst Oli Creasey stated in a report, "This morning's forecast is for sales to be broadly in line with the same period last year. This may disappoint investors hoping to view 2024 as the current low point in the housing construction cycle."