Annual house price growth accelerated to 12.6% in February, the latest Nationwide House Price Index has revealed.

The figure reflects a rise from 11.2% in January, as Nationwide confirmed this was the strongest pace of growth since June last year.

Prices also climbed by 1.7% month-on-month after taking account of seasonal effects, with February now representing the seventh consecutive monthly increase.

Average house prices have now risen above £260,000 for the first time as a result, which is an increase of £29,162 over the last 12 months – the largest ever annual increase in cash terms since the start of Nationwide’s monthly index in 1991.

Furthermore, Nationwide’s data indicates that the price of a typical home is now 20% higher than in February 2020, the month before the pandemic struck the UK, having risen by by £44,138 in that time.

“Housing market activity has remained robust in recent months, with mortgage approvals continuing to run above pre-pandemic levels at the start of the year,” said Nationwide chief economist, Robert Gardner. “A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.

“The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months.”

Gardner described the strength in the market as “particularly noteworthy” since the squeeze on household incomes has led to a significant weakening of consumer confidence.

“Consumers’ view of the general economic outlook and prospects for their own financial circumstances over the next 12 months have plunged towards levels prevailing at the start of the pandemic,” he added.

“The economic outlook is particularly uncertain at present. Nevertheless, it is likely that the housing market will slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise above 7% in the coming months.”

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