Drivers this month

• Mortgage approvals: +0.12pp
• London price growth: +0.09pp
• Regional softness: -0.04pp

Policy pulse

February’s 0.3% MoM increase remains above the Bank of England’s target for stable housing inflation, but the pace has cooled from January’s 0.8% surge. The central bank continues to monitor for signs of overheating, though the latest data suggest a moderation in upward pressure.

Market lens

Market participants greeted the print with subdued optimism. The upside surprise versus consensus (-0.1%) failed to spark a rally in UK homebuilder shares, as the deceleration from January’s robust growth tempers enthusiasm. Investors remain focused on the sustainability of demand amid higher borrowing costs.

Recent trend

• February 2026: 0.3% MoM
• January 2026: 0.8% MoM
• December 2025: 0.5% MoM
• 12-month average: 0.4% MoM
• February 2025: 0.2% MoM

Historical context

February’s reading is the lowest since October 2025, when the index also posted a 0.3% gain. Over the past six months, MoM changes have ranged from 0.2% to 0.8%, reflecting a period of moderate but persistent price growth. Year-on-year, the index is tracking slightly above its long-term trend.

Policy pulse

The Bank of England’s monetary stance remains restrictive, with policy rates unchanged since late 2025. Housing inflation continues to run ahead of wage growth, raising concerns about affordability for first-time buyers.

Scenario analysis

• Bullish (25%): Mortgage rates fall, demand rebounds, MoM prints return to 0.5%+ in Q2.
• Base case (60%): MoM gains stabilize near 0.3–0.4% as affordability caps upside.
• Bearish (15%): Further rate hikes or economic shocks push MoM readings toward zero or negative territory.

Risks and catalysts

Upside risks include a surprise drop in lending rates or fiscal support for buyers. Downside risks stem from tighter credit standards and persistent inflation. The next two months will be pivotal for gauging the market’s resilience.

Methodology

Data sourced from Sigmanomics and official UK government releases[1]. The index tracks average residential property prices, seasonally adjusted, and is reported in percentage change from the prior month.

Market lens

Muted market response underscores investor caution. The upside surprise failed to ignite risk appetite, as participants weigh the sustainability of recent gains against macro headwinds. The coming months will test whether the market can maintain positive momentum or slips into stagnation.

Policy pulse

With housing inflation still outpacing wage growth, policymakers face a delicate balancing act. The latest data offer some relief, but affordability remains a pressing concern for UK households.