The February house price figures show largest annual increase in nearly four years

British house prices recorded their biggest annual rise in nearly four years this month despite a slowdown in the month-on-month rate of growth.

Last week’s data from mortgage lender Nationwide revealed how house prices rose 0.6% in February, the slowest pace of monthly growth since June last year and down slightly from an upwardly revised increase of 0.8% in January.

But in year-on-year terms, house prices in February were 9.4% higher than in the same month last year, stronger than a rise of 8.8% in the 12 months to January and the biggest annual jump since May 2010.

Prices in the three months to February also rose strongly, growing by 3.0% compared to the previous three-month period.

A main cause of the rise is due to prices being pushed up by a shortage of properties coming onto the market, in particular new homes. This comes at a point when demand has increased due to record low interest rates, easier mortgages and growing consumer confidence.

Nationwide’s Chief Economist, Robert Gardner said, “Price growth is being supported by the fact that the supply of housing remains constrained, with housing completions still well below their pre-crisis levels, which was already insufficient to keep up with the pace of household formation”.