UK house prices rise by more than expected, Nationwide says

LONDON (Reuters) - British house prices rose by a stronger-than-expected 0.4% in February compared with January, according to data published by mortgage lender Nationwide on Friday, adding to signs of buyers rushing to beat the expiry of a tax break next month.

The increase was stronger than all forecasts in a Reuters poll of economists which had pointed to a 0.2% monthly rise after January's increase of 0.1%.

Several measures of Britain's housing market have shown a recovery in demand, helped by falling borrowing costs and also by buyers moving quickly before a tax incentive on the purchase on some homes expires at the end of March.

Robert Gardner, Nationwide's chief economist, said the stamp duty changes were likely to generate near-term volatility in transactions as buyers brought forward their purchases.

"This will likely lead to a jump in transactions in March, and a corresponding period of weakness in the following months, as occurred in the wake of previous stamp duty changes," Gardner said.

Property website Rightmove said earlier this month that a run-up in asking prices for newly listed homes was losing steam ahead of the tax change.

A Reuters poll published on Tuesday showed British home prices were expected to rise by 3.5% this year - faster than previously forecast - and by 4.0% in 2026, helped by further reductions in interest rates by the Bank of England.

Nationwide said house prices were up by 3.9% compared with February last year, slightly slower than January's 4.1% rise.

(Writing by William Schomberg; editing by William James)