House prices again easily beat expectations in February. A second successive 0.7 percent monthly rise in the Nationwide's measure was more than double the market consensus and large enough to lift the annual inflation rate to 1.2 percent, its first positive print in more than a year. Prices are now around 3 percent less than the record peak seen in the summer of 2022.

Mortgage applications have strengthened significantly in recent months and the Nationwide noted that a fall in borrowing costs had provided some support for demand. Even so, the lender sees a clouded near-term outlook due to uncertainty over the future path of interest rates and a generally subdued real economy. In addition, house prices remain very high relative to earnings.

Nonetheless, today's update underlines the surprising resilience of the housing market in the face of what has been aggressive BoE tightening. More generally, it puts the UK RPI at 29 and the RPI-P at 25, both measures showing economic activity running quite well ahead of forecasts and so further reducing pressure on the BoE MPC to ease later this month.

Prices are seen up 0.3 percent on the month following a 0.7 percent gain in January.

The Nationwide House Price Index (HPI) provides house price information derived from Nationwide lending data for properties at the post survey approval stage. Nationwide house prices are mix adjusted; that is, they track a representative house price over time rather than the simple average price.

Home values affect much in the economy especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.

Although the Nationwide data are calculated similar to the Halifax method Nationwide substantially updated their system in 1993 following the publication of the 1991 census data. These improvements mean that Nationwide's system is more robust to lower sample sizes because it better identifies and tracks representative house prices. Historically, the data go back to 1952 on a quarterly basis and 1991 on a monthly basis.

Over long periods the Halifax and Nationwide series of house prices tend to follow similar patterns. This stems from both Nationwide and Halifax using similar statistical techniques to produce their prices. Nationwide's average price differs because the representative property tracked is different in make up to that of Halifax.