UK house prices rose at the fastest annual pace since late 2004 and the average price of a home set a new high in March, survey data from the Nationwide Building Society showed Thursday.
The house price index climbed 14.3 percent year-on-year, which was the fastest growth since November 2004, after a 12.6 percent increase in February. Economists had forecast 13.5 percent rise.
On a month-on-month basis, house prices rose 1.1 percent in March following a 1.7 percent increase in the previous month. Economists had expected a 0.8 percent gain.
The average price of a UK home climbed to a new record high of GBP 265,312, up over GBP 33,000 in the past year.
House prices are now 21 percent higher than before the pandemic struck in early 2020, Nationwide said.
“The housing market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs,” Nationwide Chief Economist Robert Gardner said.
“A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.”
Strong labor market conditions and significant savings accrued during the coronavirus lockdown is underpinning the demand, the economist noted.
That said, Gardner continues to expect that the housing market is likely to slow in the quarters ahead.
An intensification of the squeeze on household incomes and the escalating inflation amid high global energy prices remain high could dampen the housing market.
“Moreover, assuming that labor market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates,” Gardner added.