House prices rose at their fastest rate for two years in the twelve months to February, according to the latest figures from the Office for National Statistics.
The average UK property rose in value by £13,000 across the year, or 5.4 per cent, based on provisional estimates by the ONS.
This was more than the 4.8 per cent rise in the 12 months to January, and is the highest level of growth seen since December 2022 when prices went up by 7.3 per cent.
The growth has been attributed to buyers seeking to complete their home purchases ahead of stamp duty rates rising in April this year.
However, growth was flat on a monthly basis, with the average house price going up by just £91 in February itself.
The typical UK home sold for £268,000. In England the average property sold for £292,000, in Wales it was £207,000 and in Scotland the average property fetched £186,000.
Rise: The typical house price went up by 5.4% in the year to February according to the ONS
The latest uptick in prices is being attributed to a final flurry of activity as buyers rushed to beat stamp duty changes, which were introduced at the start of April.
From 1 April, the nil-rate threshold, under which no stamp duty is paid, dropped from £250,000 to £125,000, returning to where it was before temporary changes were made in 2022.
Meanwhile, first-time buyers saw their nil-rate band threshold drop from £425,000 to £300,000.
Jonathan Handford, managing director at national estate agent group Fine & Country, said: ‘House prices edged up in February, likely reflecting a final flurry of demand as buyers raced to beat the stamp duty threshold changes coming into effect in April.
‘February became a key deadline for those trying to secure a purchase before facing steeper costs — pushing a wave of sales over the line and giving prices a temporary lift.’
House prices fall in London
In London, house prices remain in the doldrums. Average prices paid in London fell by 1.1 per cent in February after flatlining throughout much of 2024.
Year-on-year, the average property in the capital is up 1.7 per cent, according to the ONS figures.
In the North West and North East of England, prices were up 8 per cent and 7.9 per cent respectively year-on-year.
Jonathan Hopper, chief executive of buying agent, Garrington Property Finders, said:
‘In both cases the driver is the same – surging demand from buyers who see that their money goes further, and buys more home, in these better value regions.
‘On the front-line we’re seeing lots of high-value homes coming onto the market – especially in London’s highly sought-after, prime postcodes – and this abundance is putting buyers firmly in the driving seat and giving them the confidence and clout to negotiate hard on price.’
Too expensive? London property prices fell 1.1% in February and the ONS says only rose 1.7% year-on-year
What next for property prices?
The future of property prices hinges on lots of factors including mortgage rates, unemployment rates, pay growth and general sentiment.
The Bank of England is forecast to cut the base rate to 4.25 per cent in May, after reports today revealed inflation dipped again to 2.6 per cent – closer to the Government’s 2 per cent target.
Handford added: ‘Looking ahead, global headwinds such as the latest US tariffs under Trump’s proposed trade plans could add strain to the broader economy.
‘This could prompt the Bank of England to consider further rate cuts to keep growth on track.
‘While the February price bump may prove short-lived, there are signs of cautious optimism.
‘A softer inflation outlook and potential rate reductions could support borrowing conditions — but affordability remains a hurdle, especially for those now facing a tighter stamp duty regime.’
At present the Bank of England is forecast to cut interest rates three more times this year.
However, there is a scenario where the Bank of England of England decides to hold interest rates higher for longer.
Tom Bill, head of UK residential research at Knight Frank, said: ‘The turbulence created by global trade tensions has put downwards pressure on borrowing costs due to economic slowdown fears, but that won’t necessarily remain the case.
‘The risk is that inflationary forces arising from US tariffs and UK tax changes keep rates higher for longer, which would curb housing demand and prices.
‘For now, activity is steady as the spring market gets underway, with demand particularly strong among needs-driven, equity-rich buyers.’