However, it remains below the rates recorded between July and September 2014. The three monthly rate increased despite a small monthly fall in February due to robust rises in both December and January.
House prices fell by 0.3% between January and February, partly offsetting January’s 1.9% rise.
Prices in the three months to February were 8.3% higher than in the same three months a year earlier. This was a little lower than January’s annual increase of 8.5% and significantly below the peak of 10.2% in July 2014.
Home sales eased further in January 2015. Despite a 15% increase between 2013 and 2014, home sales fell for the fourth consecutive month in January. Sales in the three months to January were 2.5% lower than in the preceding three months and sales in January 2015 were 6.1% lower than in January 2014.
The volume of mortgage approvals for house purchases increased for the second consecutive month in January, to 60,786. The recent modest rise in approvals follows five successive monthly falls between July and November 2014. Approvals in January 2015 were also 20% lower than in January 2014.
Housebuilding also increased in 2014, with the number of completions in England rising by 8% from 109,490 in 2013 to 118,760 in 2014. This was the second successive annual increase. Despite this pick-up, the level of completions remained 33% below the total in 2007 and is well below the rate at which new households are being formed. The number of new homes being started in the final quarter of 2014 was also 9% lower than in the same period a year earlier, highlighting the ongoing weakness in housebuilding.
New instructions increased for the first time in six months in January. There was also a modest rise in the number of properties for sale on surveyors’ books. Nonetheless, the supply of homes on the market remains low and has changed little over the past year.
Martin Ellis, housing economist, said: "House prices in the three months to February were 2.6% higher than in the preceding three months. This measure of the underlying rate of house price growth increased for the second consecutive month in February despite a small monthly fall in prices. Annual price growth nonetheless eased, from 8.5% in January to 8.3%, and is comfortably below last July’s peak of 10.2%.
The firming in price growth shown by the recent pick-up in the three month-on-three month comparison and indications of a modest rise in activity are likely to be due to a boost to housing demand as a result of increases in real earnings and spending power, further recent falls in mortgage rates and stamp duty changes.
The supply of both new and secondhand homes available for sale remains low; another factor that is likely to be supporting house prices. Supply remains tight despite housebuilding in England increasing for the second consecutive year in 2014 and a recent rise in the number of properties coming on to the market.”
Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “A fusion of economic factors is alleviating some of the financial burden of forming a deposit. Wages are starting to recover and inflation has fallen to a record low, meaning buyers have slightly more cash to play with day-to-day. And stamp duty fees were slashed for many new buyers when the government reformed the old slab system, freeing up further funds. It’s still difficult to save – with savings rates tied closely to the low base rate. But it’s easier to put cash aside than it was a year ago.
However, property prices have pushed a new record for first-time buyers, meaning these extra funds are being diverted directly into larger deposits. Putting together a deposit to buy a property remains one of the most arduous tasks for prospective home-buyers, and schemes like Help to Buy are essential to allow the swathes of buyers reliant on higher LTV mortgages to get onto the housing ladder.”
