U.K. house prices increased for the first time in three months in February, largely reflecting a temporary gain as buyers rushed to avail the stamp duty exemption.
House prices increased 0.6 percent month-on-month, the biggest gain since April 2010, the Nationwide Building Society said Thursday.
The increase offset a 0.3 percent fall in January. Economists had forecast only 0.2 percent rise for February. The price of a typical home is now GBP 162,712.
On a yearly basis, house prices grew 0.9 percent in February. The annual rate accelerated from 0.6 percent, while economists had expected the rate to fall to 0.3 percent.
Housing activity picked up in February suggesting that economic activity may not be as weak as feared. "However, it remains to be seen whether this trend will be sustained," Nationwide Chief Economist Robert Gardner said.
The economist said the increase may be the result of a temporary rise in first time buyers entering the market to take advantage of the stamp duty holiday before it expires in March.
"If so, this may continue to support activity and prices in the near term before cooling over summer," Gardner reckoned.
The rate of home ownership decreased in recent years as weak labor market conditions and the uncertain economic outlook depressed the demand for homes, especially from first time buyers. Moreover, residential property remains expensive relative to incomes.
Gardner noted that the flip side of the decline in home ownership rates has been a rise in the proportion of people renting. The increase in the demand for rental property has added upward pressure on rents. Still the aspiration to eventually become a homeowner remains undiminished.
Despite current signs of improvement, the economic fundamentals still look far from rosy for the housing market with unemployment high and likely to rise further, earnings growth muted, debt levels high and the outlook uncertain, IHS Global Insight Chief U.K. economist Howard Archer said.
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