UK house prices are demonstrating the strongest growth since July 2018, according to the latest house price index by Nationwide. Those yet to buy a house and take out a mortgage will find that house prices increased by 0.3 per cent month-on-month in February 2020, with the annual house price increase currently standing at an average of 2.3 per cent.
What's behind the increase in house prices? Robert Gardner, Nationwide's Chief Economist, explains that the current boost in property prices is due, not to a strong economy, but to an auspicious alignment of socio-political factors:
'While overall economic growth ground to a halt in the final three months of 2019, labour market conditions remained buoyant and borrowing costs low. The decisive election outcome may have provided a boost to buyer sentiment.'
In other words, the current upward trend in house prices may well be temporary; the UK housing market is still vulnerable to an economic downturn until we know what trade deals we'll be able to strike with the EU post Brexit, and – perhaps somewhat surprisingly – to the potential effects on the economy of the Coronavirus outbreak. The next quarter will be crucial in showing how the UK economy reacts to these challenges – for example, whether there will be a contraction in foreign investment or a curtailment of trade with the countries most affected by the virus.
The broad prognosis for 2020 remains modestly optimistic. Gardner concludes,
'Overall, we expect the UK economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat in 2020 as a whole.'
Does this mean that you should wait until later in the year to buy a house? Not really: a major property market crash is highly unlikely, but the seasonal increase in house buying activity is a guarantee. Don't wait until the summer when everyone is house hunting; the earlier you begin your search and your mortgage application, the more time you'll have to find the house you actually want.
We've partnered up with the online mortgage specialist Habito to help you find the very best mortgage deal for your circumstances. Use their online comparison tool below to get an idea of how much you could borrow.