The average house price in the UK increased 5.8 per cent in the year to February, according to a report released today by the Office for National Statistics (ONS). The house price index climb was faster than the 5.3 percent annualised rise recorded for January.

This was also the strongest rise recorded by the ONS since October 2016, when prices had grown 6.1 per cent. However, this still remained below the average annual house price growth seen in 2016 of 7.3 per cent. Lack of supply: the gently increasing rate of price growth is welcome.

In February the average UK house price was £218,000, £12,000 higher than a year before and £2,000 higher than the previous month.

Average house prices in the London (£475,000) are the highest in the country. The East of England is the region which showed the highest annual growth, with prices increasing by 10.3 per cent in the year to February 2017.

Growth in the East Midlands was second highest at 7.5 per cent, followed by the West Midlands at 7.0 per cent. The lowest annual growth was in the North East, where prices increased by 2.2 per cent over the year.

Despite the buoyant ONS house price data for February, it is anticipated that the housing market will be increasingly affected by the deepening squeeze on consumers and their concerns over the outlook.

Elevated house price to earnings ratios will likely weigh down on housing market activity and house prices. However, a shortage of supply is likely to put a floor under prices.

Executive director of Garrington Property Finders, Nicholas Finn, said: 'The gently increasing rate of price growth is welcome – but no one should confuse it with robust health in the property market. Rather it's a symptom of the chronic lack of supply.'

Analysts believe housing market activity and prices is likely to be pressurised by stretched hose prices to earnings ratios and tight checking of prospective mortgage borrowers by lenders.+3

Bank of England data showed a February slowdown in mortgage approvals for house purchases

Finn added, 'With consumer price inflation holding steady in March, the Bank of England will continue to delay any interest rate rise for as long as possible, leaving the way clear for the property market to continue its slow upward progress.

'These are positive numbers from the housing market, and while one swallow does not a summer make, it could be the start of the spring market.'

The latest survey from the Royal Institution of Chartered Surveyor (RICS) commented on lack of supply in its February survey 'that key activity indicators in the sales market remain subdued with transaction volumes broadly unchanged for the third month in succession.

Finn commented 'The number of homes for sale is still very limited in many areas, with the RICS reporting that listings have remained stagnant for 12 months in a row.

'Ordinarily such constrained supply, plus the continued availability of incredibly cheap mortgages, would drive prices up much faster than they are.

Despite ongoing very low mortgage interest rates that should help the housing market, the slowdown in February mortgage approvals reported by the Bank of England also hint at further consumer pressures.

With consumer price inflation holding steady in March, the Bank of England will continue to delay any interest rate rise for as long as possible, leaving the way clear for the property market to continue its slow upward progress.

ONS figures on the private rental sector show rents in England, Scotland and Wales climbed by 2 per cent in the year to March 2017, down from 2.1 per cent in February.

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