UK house prices increased by 0.3% in February, bringing the average property value to £301,151, according to Halifax’s latest House Price Index. The monthly rise follows a 0.8% increase in January, with annual growth reaching 1.3%, the strongest rate recorded in four months.
Since the start of 2026, average property prices have risen by approximately £3,000. However, Amanda Bryden, Head of Mortgages at Halifax, cautioned that geopolitical uncertainties in the Middle East could affect the outlook for inflation and interest rate reductions.
“Markets are now anticipating a more gradual path for interest-rate reductions. If realised, the speed at which borrowing costs ease may be tempered,” Bryden said.
Regional disparities persist
The data reveals significant regional variations in house price performance. Northern regions experienced stronger growth, with the North East recording a 3.5% annual increase to £181,838, and the North West showing 2.9% growth to £246,292.
Southern markets continued to see price declines. The South East led falls with a 2.2% year-on-year decrease to £383,834, whilst London saw values drop 1.0% to £538,200.
Mary-Lou Press, President of NAEA Propertymark, noted that sustained pricing above £300,000 signals continued buyer confidence but presents challenges for first-time buyers facing higher deposit requirements.
Market conditions and affordability
Industry data for January showed a slight easing in new mortgage approvals, though overall activity has remained resilient. Affordability constraints persist, with supply remaining limited across many markets.
Nicky Stevenson, Managing Director at Fine & Country, observed that conditions for buyers have been gradually improving with easing interest rates and inflation. “Buyers are active, but they remain value-led,” Stevenson stated.
Iain McKenzie, CEO of The Guild of Property Professionals, reported that housing stock has increased by approximately 6% compared to a year ago, helping to keep values in check. The average five-year fixed mortgage rate has dipped below 4% for the first time in several years.
Outlook clouded by geopolitical factors
Tom Bill, head of UK residential research at Knight Frank, warned that a prolonged conflict in the Middle East would dampen sentiment and delay rate cuts due to rising inflation, putting downward pressure on prices.
Jeremy Leaf, a north London estate agent and former RICS Residential Chairman, reported that some buyers and sellers have paused activity since the conflict began. “The availability of stock, particularly from landlords exiting the rental sector, and underlying worries about the economy, mean prices stay subdued and transaction times lengthen,” Leaf said.
Tomer Aboody, Director of MT Finance, noted that many potential buyers who have been waiting are now proceeding with purchases regardless of market conditions, concluding that government assistance such as stamp duty reform appears unlikely in the near term.
The spring moving season typically sees increased activity, which should provide further clarity on market direction in the coming months.
