While this figure shows that prices are stable, it is down from a 2.2% annual increase in the 12 months to January 2013 suggesting that it is still too soon to talk about a real estate recovery.
The data also shows that house price growth remains relatively stable across most of the UK, although prices in London are increasing and prices in Northern Ireland are still falling.
There was year on year growth of 2.1% in England and 4.1% in Wales, which were offset by year on year prices falls of 1.2% in Scotland and 7.7% in Northern Ireland.
Annual house price increases in England were driven by a 5.9% rise in London and a 2.4% increase in the North East.
Excluding London and the South East, UK house prices increased by 0.6% in the 12 months to the end of February 2013.
On a seasonally adjusted basis, UK house prices were unchanged between January and February 2013.
The figures also show that first time buyers, the crucial entry level of the UK’s housing market are having to pay more for their first property. In February 2013, prices paid by first time buyers were 1.6% higher on average than in February 2012. For owner occupiers prices increased by 2.1% for the same period.
David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, believes that the stability is a positive sign. ‘The housing market is starting to poke its head above the parapet. For so long it’s been ducking for cover from the economic storm clouds of the financial crisis. But the skies are clearing, and 2013 looks set to be the brightest year for the housing market since 2007,’ he said.
‘House prices are creeping steadily upwards, while mortgage lenders are helping drive the market forward by offering a wider and cheaper range of loans, which is aiding first time buyers. But a full rehabilitation of the market will be a long, drawn out process,’ he pointed out.
‘First time buyer numbers are still just half what they were in 2007 and banks are reluctant to drastically increase their lending volumes. Regulators are imposing strict rules too quickly, which is forcing banks to focus on restructuring their businesses rather than on upping their lending,’ he explained.
‘Looking ahead, lenders are much more optimistic about the future. The recent Budget plans which outline the Help to Buy Scheme could be a real booster and will stimulate first time buyer activity when it comes into force. In order for the housing market to progress for now, any expansion in lending must be bottom up. First time buyers are the lifeblood of the market, and more can still be done to help them,’ he added.
David Brown, commercial director of LSL Property Services, said that first time buyers are still finding it tough. ‘Increasing house prices are a positive sign for the housing market, but a growing hurdle for a new generation who want to share in that prosperity. Insipid wage growth and chronically high inflation are riding roughshod all over first time buyers’ finances, and higher house prices will only make it harder for them to get the mortgage they want,’ he explained.
‘At this rate the average new buyer will have to get together £2,800 more than a year ago for their first home, that’s an increase of £230 every month. Unless the flagship Help to Buy schemes are matched by new building to help increase the supply of housing, there’s little sign this will change,’ he added.
He pointed out that both aspects of Help to Buy rely on a 5% deposit from the buyer. ‘On average that’s £8,650. With hourly wages down 8.5% since 2009, for a huge section of people that isn’t achievable. Even for those lucky enough to have a 5% deposit, this is currently being devalued at a rate of £12 pounds a month. Increasing tides of people are making use of the private rented sector, and the rental market itself will have to expand to provide for them,’ he added.
