British house price growth picked up unexpectedly last month, mortgage lender Nationwide said today, defying expectations of a slowdown as finance minister Rishi Sunak readies new budget measures to boost the market.
House prices rose 6.9% in annual terms in February from 6.4% in January, Nationwide said, above all forecasts in a Reuters poll of economists that had pointed to a slowdown to 5.6%.
In February alone, prices rose 0.7%, more than reversing a 0.2% decline in January and bucking expectations for a 0.3% drop.
Nationwide said the outlook for the housing market was particularly uncertain right now, with the potential for it to be boosted further by Sunak when he presents his annual budget tomorrow.
But the market could slow because of a weakening labour market, the lender said.
Sunak looks set to extend a temporary cut to property purchase taxes until June and announce a new mortgage guarantee scheme for first-time buyers, according to media reports.
Samuel Tombs, economist at Pantheon Macroeconomics consultancy, said he doubted any new scheme would solve affordability problems faced by first-time buyers.
"Nonetheless, our forecast for house prices to drop by about 2% this year now looks too downbeat, though we'll wait for details of the guarantee scheme to be released before providing new numbers," Tombs said.