UK house prices rise more than expected, Nationwide data shows

Nationwide and Bank of England data highlight housing market trends

LONDON, March 2 (Reuters) - British house prices rose slightly faster than expected last month after a dip at the end of 2025 linked to uncertainty over finance minister Rachel Reeves' budget, mortgage lender Nationwide Building Society said.

Annual and monthly price increases exceed forecasts

Prices increased by 1.0% in the 12 months to the end of February. Economists polled by Reuters had forecast a median 0.7% rise in annual terms.

House prices in February were 0.3% higher on the month, the same pace of increase as in January but a touch stronger than the poll's median forecast for an increase of 0.2%.

Expert commentary on market recovery

"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," Nationwide Chief Economist Robert Gardner said.

"Nevertheless, the number of mortgages approved for house purchase remains close to the levels prevailing before the pandemic."

Mortgage approvals and interest rate outlook

Bank of England figures and market indicators

Separate figures due later on Monday from the Bank of England are expected to show a small increase in the number of mortgages approved by lenders in January.

Mortgage approvals are a leading indicator for house purchases.

Interest rate expectations

Many investors think the BoE will cut its main interest rate to 3.5% this month.

Risks to the housing market recovery

Paul Dales, chief UK economist at Capital Economics, said Monday's data suggested that the improvement in the housing market and the wider economy at the turn of the year has been sustained.

"The growing risk, though, is that an inflationary shock from the events in the Middle East puts the handbrake on housing by limiting interest rate cuts," Dales said.

(Reporting by Suban Abdulla; Editing by William Schomberg and Hugh Lawson)