This took average prices to £196,930 and overall the annual rate of growth has remained between 3% and 5% since the summer of 2015, according to the data from lender the Nationwide.
The index report also says that the number of mortgages approved for house purchase increased sharply in January to almost 75,000, up from around 71,000 approvals in December and the highest number since January 2014.
However, Nationwide’s chief economist Robert Gardner pointed out that much of the increase is likely to be related to the impending increase in Stamp Duty on second homes which is due to take effect in April 2016.
He pointed out that after declining gradually over the past 12 years, the rate of home ownership in England stabilised in 2014/2015 but at 63.6%, this is well below the peak of 70.9% recorded in 2003.
‘This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring/summer. Looking through this volatility we expect the underlying pace of activity to increase in the quarters ahead as improving labour market conditions and low borrowing costs provide ongoing support,’ he said.
Gardner pointed out that after declining gradually over the past 12 years, the rate of home ownership in England stabilised in 2014/2015 but at 63.6%, this is well below the peak of 70.9% recorded in 2003.
‘If we look at the shift in tenure patterns by age over the past decade, we see a particularly marked decline in home ownership rates amongst the younger age groups, especially amongst 25 to 34 year olds, traditionally the segment containing most first time buyers. While there was a marginal uptick in 2015, the proportion of younger adults who own their own home, currently 37%, remains considerably lower than 10 years ago,’ he explained.
‘Over the same period, the proportion of people renting increased from 43% to 63%. For 16 to 24 year olds, the proportion renting increased from 73% to 92% over the same period. The increase has occurred in the private rental sector, which currently houses 19% of total households. Over the past 10 years, the number of privately rented households has increased by 75% to 4.3 million,’ Gardner said.
He also pointed out that the latest English Housing Survey showed that the proportion of private renters who expect to buy a home at some point in the future declined from 61% to 57%, the lowest reading since the survey began in 2008/2009. Even amongst those who expect to buy a home, for most this remains a longer term aspiration, with 75% expecting it to take at least two years.
March is likely to be similar in terms of house prices and sales, according to Alex Gosling, chief executive officer of online estate agents HouseSimple, as people continue to try to beat the additional home stamp duty surcharge due to being on 01 April.
‘February house price growth has being driven by the buy to let gold rush with investors trying to get in before the stamp duty hike. March is likely to be more of the same, as time is running out. It will be interesting to see what happens in April, which is historically a buoyant time for the housing market,’ he said.
‘We are walking into the unknown, and there's a chance that demand will drop like a stone.
But with fewer buy to let investors we could well see a surge in first time buyers coming to the market. Home buyer demand has always been there, but they have often struggled to compete against committed investors, many of whom can buy for cash,’ he explained.
‘When they are fighting on a more level playing field, we could well see the drop off in investor numbers replaced by a surge in first time buyer numbers,’ he added.
Mark Posniak, managing director of Dragonfly Property Finance, thinks it is hard to know if the April stamp duty deadline will be a speed bump for the market or a speed boost.
‘Demand from buy to let investors will fall away during March but first time buyers could arrive in numbers. The appallingly low home ownership rate for younger people may well pick up. With Bank rate seemingly set in stone for 2016, and people confident about their jobs, demand is unlikely to wane,’ he said.
‘Demand is also being driven by the age-old fear of being priced out of the market. It's especially pronounced in London and the South East. While February’s growth rate was benign, the market is likely to pick up in the spring and summer due to the continued imbalance between supply and demand,’ he pointed out.
‘The ebb and flow of the property market is difficult to predict at the best of times but with the possibility of Brexit and the April stamp duty change impacting landlords, it's bordering on the impossible,’ he added.
However, while buyer activity has been boosted by the stamp duty change, Jonathan Hopper, managing director of the buying agents Garrington Property Finders, pointed out that price growth has remained fairly steady and the big question is what will happen from April onwards.
‘The chronic shortage of supply is likely to continue nudging up prices, even after the pre-April stimulus fades. But while buyer demand is being driven by the widespread perception that interest rates won’t rise for at least another year, the uncertainty over a possible Brexit has yet to have an impact,’ he said.
‘Buyer confidence is no longer bulletproof, and fears of a Brexit could have a significant chilling effect on the market in the run up to the June referendum. So while 2016 has got off to a solid start, the breathless rate of price growth seen last year is unlikely to return. This could yet prove a challenging year, making it all the more crucial for buyers to enter the market with their eyes wide open,’ he added.
