Mortgage lending giant Halifax claims that a stamp duty tax cut, rising wages and improved spending power have fueled greater demand from homebuyers.
Halifax also reported that despite the increase in demand property prices fell slightly in February - the first fall for 4 months.
Yearly property inflation also slowed down last month, to 8.3 percent from 8.5 percent in January, both of which are significantly lower than the recent 10.2 percent peak in July. According to Halifax, prices went down 0.3 percent in February- the first monthly decrease since October 2014. Yet the average UK home is now priced at £192,372, which is £11,933 higher than market values a year ago.
The mortgage lender added that its quarterly figures were indicative of property prices going up. Totals in the three months to February were up by 2.6 percent compared to the three months to December. These figures are considered more reliable than the monthly ones.
Halifax housing economist Martin Ellis said that house prices are also being supported by a low supply of available new and existing homes for sale. Availability remains tight despite increasing housebuilding activity in the UK and a recent rise in the number of homes being put on the market.
Howard Archer from IHS Global Insight believes these numbers demonstrate the volatility that property prices can experience from one month to the next and even from survey to survey.
He said that house prices still appear to be constrained by quieter market activity compared to the opening months of 2014. Other recent surveys point to a cool-down in the this year’s housing market compared to 2014, when property prices increased during the first half.
Nationwide recently reported that prices were down by 0.1 percent in February after a January increase of 0.3 percent. However, on an annual basis property values were still 5.7 percent higher than they were in 2014.