Nationwide Reports Modest House Price Growth Amid Market Recovery
Nationwide Building Society has released its latest House Price Index, indicating a modest recovery in the UK property market. The data shows that annual house prices grew by one per cent, with a month-on-month increase of 0.3%. The average house price in the United Kingdom now stands at £273,176, up from £270,873 in the previous month.
Economic Headwinds Threaten Housing Market Stability
Despite these positive indicators, property experts have issued stark warnings that the recent escalation of geopolitical tensions could rapidly destabilise the housing market. The strikes on Iran over the weekend have triggered concerns about rising oil prices, which could lead to increased inflation and higher mortgage rates.
Robert Gardner, Nationwide's chief economist, commented on the findings: "This reinforces the view of a modest recovery after a dip at the end of 2025, most likely reflecting uncertainty around potential property tax changes ahead of the Budget."
Transaction Volumes Show Significant Improvement
Gardner provided further insight into market activity: "Looking across 2025 as whole, total housing market transactions were 10% higher than in 2024. Improved affordability and an easing in credit availability has helped to support first-time buyer activity, with mortgage completions up 18% year on year."
He continued: "Home mover transactions involving a mortgage have also recovered over the past year, with activity up 15% year on year. There has also been a gradual increase in the number of buy-to-let purchases involving a mortgage, although activity remains quite subdued compared to historic levels."
Cash Transactions Show Changing Market Dynamics
The Nationwide report also highlighted shifting patterns in cash transactions: "Cash transactions last year were at a similar level to 2024. In recent years, there had been something of a decline in the share of cash purchases, which accounted for 35% of transactions in 2025, down from a peak of 42% in 2023."
Industry Experts Voice Concerns Over Market Volatility
Babek Ismayil, CEO at homebuying platform OneDome, expressed concern about inflationary pressures: "Though the Budget resulted in a sluggish fourth quarter last year, the one positive amid the fiscal uncertainty was ongoing improvements in affordability. Lenders have been doing their utmost to help first-time buyers get onto the ladder and it's starting to show with transaction levels up."
Ismayil added: "Mortgage rates have also been edging down this year as lenders priced in the likelihood of further rate cuts, but clearly events in the Middle East over the weekend could prove inflationary and now delay any cuts. It's currently a very fluid situation."
Mortgage Professionals Warn of Rising Rates
Shaun Sturgess, director at Swansea-based Sturgess Mortgage Solutions, highlighted the potential impact on borrowing costs: "It's been a strong start to 2026 to date with falling mortgage rates at higher loan-to-values and lender affordability improvements oiling property transactions. But following the weekend's events and strikes on Iran, oil has suddenly become the operative word."
Sturgess continued: "The recovery in the property market Nationwide alludes to could be derailed quite quickly if oil prices continue to rise sharply. The Bank of England's forecasts, suggesting inflation would be back at around target in the not-too-distant future, are now under threat, as is the prospect of rate cuts in the first half of the year."
Bank of England Rate Cuts Now in Doubt
Andrew Montlake, CEO at London-based Coreco, discussed the implications for monetary policy: "Prices rose slightly in February, but that could turn quite quickly after this weekend's events in the Middle East. The impact on the UK economy could be profound. Domestically, more rate cuts this year by the Bank of England were priced in, but this now looks far less likely as oil prices are already headed north and could potentially rise sharply."
Montlake added: "There is every chance swaps will start to move up on Monday, which will be a blow to borrowers. The UK economy and property market, which so desperately needs a rate cut or two, may now have to wait longer. Expect a turbulent week ahead."
Brokers Monitor Market Reactions Closely
Emma Jones, managing director at Runcorn-based Whenthebanksaysno.co.uk, explained how industry professionals are responding: "Prices rose in February, with affordability a key driver, but a lot has changed in the first two days of March. Inflation falling is no longer guaranteed if oil prices soar and that could jeopardise a rate cut by the Bank of England. Brokers will be watching how swap rates react throughout Monday and there's every chance mortgage rates could start to rise again."
First-Time Buyers Adopt New Market Strategies
Justin Moy, managing director at Chelmsford-based EHF Mortgages, offered insight into changing buyer behaviour: "The House Price Index can mask a multitude of changes within the property sector, these figures don't always paint the whole scene. First-time buyers are ignoring leasehold properties and looking to jump halfway up the property ladder, while landlords quietly pick up those flats at reduced prices."
The property market now faces a critical period where geopolitical developments could significantly impact the fragile recovery highlighted in Nationwide's latest data. Industry professionals remain vigilant as they monitor how these external factors will influence housing affordability, mortgage rates, and overall market stability in the coming weeks.
