Average UK house prices have topped £260,000 ($346,051) for the first time, an increase of £29,162 over the past 12 months., according to the Nationwide House Price Index.
The record was reached in February when annual house price growth increased to 12.6 per cent, from 11.2 per cent in January. On a monthly basis, the increase was 1.7 per cent.
The new benchmark comes just months after average UK house prices exceeded £250,000 for the first time, in November 2021.
The rising price indices follow a long-term trend that has been rocket fuelled by the pandemic. The cost of a typical home in the UK is now 20 per cent higher than in February 2020, the month before the UK locked down in the face of rising coronavirus cases.
Despite the price-rising trend being well established, its continuation into 2022 was not anticipated by Nationwide's chief economist, Robert Gardiner.
“The continued buoyancy of the housing market is a little surprising given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5 per cent in January, and since borrowing costs have started to move up from all-time lows in recent months," he said.
“The strength is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence.
"Indeed, consumers’ view of the general economic outlook and prospects for their own financial circumstances over the next 12 months have plunged towards levels prevailing at the start of the pandemic."
While this economic uncertainty has not manifested in the housing market as yet, Mr Gardiner believes it is only a matter time before it slows down, with household incomes likely to be further squeezed and inflation forecast to rise above 7 per cent.
He even suggested that this forecast might be optimistic, citing the potentially inflationary effect of the Russia-Ukraine crisis on oil prices.
To compound matters, he predicted an expected future Bank of England increase in interest rates will "exert a further drag on the market if [it] feeds through to mortgage rates".
The overall effect will be to to make houses even more unaffordable than they are at present, Mr Gardiner said.
“Housing affordability has already become more stretched, in part because house-price growth has been outstripping earnings growth by a wide margin since the pandemic struck. The price of a typical home is now equivalent to 6.7 times average earnings, up from 5.8 in 2019.”