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Despite the cost of living crisis, UK house prices increased the most in eight months in February underpinned by improving consumer confidence and the resilient labor market, data from the Lloyds Bank subsidiary Halifax and S&P Global showed on Tuesday.

House prices logged a monthly increase of 1.1 percent in February, faster than the 0.2 percent increase posted in January, while economists had forecast a 0.3 percent fall.

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This was the second consecutive increase and also marked the fastest growth since June 2022.

A typical house costs GBP 285,476 in February compared to GBP 282,360 in January.

Year-on-year, house price growth held steady at 2.1 percent in February, data showed. On a quarterly comparison, house prices fell 2.5 percent.

Halifax Mortgages Director Kim Kinnaird said recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labor market are helping to stabilize house prices following the falls seen in November and December.

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Nonetheless, with the cost of a home down on a quarterly basis, the underlying activity indicates a general downward trend, Kinnaird noted. Housing affordability will continue to pose challenges for many buyers with average house prices remaining high.

The substantial recovery in Halifax house prices in February added weight to the view that there will be a stand-off between buyers and sellers that causes transactions to slump, but with minimal price falls, Capital Economics’ economist Andrew Wishart said.

Housing data from Halifax was in stark contrast with the report published by Nationwide Building Society, which showed house prices declined the most in more than a decade in February.

Nationwide house prices fell 1.1 percent on year, marking the first fall since June 2020 and the biggest decline since November 2012.

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The latest mortgage approvals data from the Bank of England also suggested weakness in the housing market. Approvals for house purchases fell to 39,600 in January from 40,500 in December.

The Bank of England has raised its benchmark interest rate by 390 basis points since the current tightening cycle began in December 2021.

By Renju Jaya

Source: RTT News

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