UK house prices recorded a modest rise in February, signalling a gradual recovery in the property market after uncertainty at the end of last year. New figures from Nationwide Building Society show that the average home now costs £273,176, up from £270,873 in January. This represents a monthly increase of 0.3%.
On an annual basis, prices remained stable with growth holding at 1%. The seasonally adjusted index also edged higher, reflecting steady movement rather than sharp acceleration. Analysts had expected only limited growth, so the results suggest the market has been more resilient than many predicted.
Robert Gardner, Nationwide’s chief economist, said the data points to a slow but positive improvement following the downturn seen towards the end of 2025. He explained that the earlier slowdown was largely driven by concerns over possible changes to property taxation ahead of the government’s budget announcements.
According to Gardner, mortgage approvals for home purchases remain close to levels seen before the pandemic. This indicates that buyer interest has not disappeared, even after a period of higher borrowing costs and economic uncertainty.
Looking at the wider picture, total housing transactions throughout 2025 were around 10% higher than in 2024. Improved affordability and slightly easier access to credit have helped support demand, particularly among first-time buyers. Mortgage completions for this group rose by 18% compared with the previous year.
Home movers have also become more active. Mortgaged transactions for existing homeowners increased by 15% year-on-year, suggesting more people are willing to change property despite ongoing financial pressures.
The buy-to-let sector, however, remains under strain. While there has been a small rise in mortgage-backed purchases by landlords, activity is still well below historical levels. Higher interest rates continue to weigh heavily on this part of the market, alongside regulatory changes that have reduced confidence among landlords.
Gardner noted that borrowing costs tend to affect landlords more than owner-occupiers. Combined with new regulations, this has created headwinds that continue to hold back investment in rental properties.
Cash buyers remain an important part of the market, but their share of overall transactions has declined in recent years. In 2025, cash purchases made up 35% of all sales, down from a peak of 42% in 2023. This shift reflects the return of mortgage-backed buying as interest rates begin to stabilise.
The outlook for the housing market will depend heavily on whether affordability continues to improve. Gardner said that activity is likely to strengthen over the coming months if incomes keep rising faster than house prices and borrowing conditions ease further.
There are also political factors influencing confidence. Unlike the period leading up to last November’s budget, the current spring forecast has not generated the same level of concern about potential tax changes. This has helped to avoid the “negative speculation” that previously slowed the market.
Jason Tebb, president of property website OnTheMarket, said buyer and seller confidence has improved in early 2026. He noted that people are proceeding with their plans more decisively, as there has been less uncertainty surrounding government policy compared with last year.
Chancellor Rachel Reeves is expected to use the spring forecast to highlight progress in tackling the cost of living and restoring stability after a turbulent period for the economy. This broader economic messaging may also play a role in supporting housing market sentiment.
Inflation had been forecast to fall towards the Bank of England’s 2% target by April, which would open the door for further interest rate cuts. Lower mortgage rates could provide additional support for buyers and help sustain demand.
However, global events have added fresh uncertainty. Rising oil prices following international tensions have reduced expectations of an immediate rate cut, reminding markets that external factors can still influence domestic housing conditions.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said the steady increase in prices reflects improving confidence and a growing supply of homes coming onto the market. She added that buyers appear to be adjusting to the end of previous tax incentives and are gradually returning.
Overall, February’s figures suggest the UK housing market is moving cautiously in the right direction. While challenges remain — particularly for landlords and those facing higher borrowing costs — improved affordability, steady demand and calmer political conditions are helping to rebuild confidence.
If these trends continue, the coming months could see further stabilisation and moderate growth, with first-time buyers playing a central role in driving activity across the market.
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