House price inflation is still on the up but recent interest rate hikes are weakening underlying demand, according to new research.

The Nationwide house price report found that property price inflation increased by 0.7 per cent this month, up from January's 0.3 per cent.

This led to an annual growth of 10.2 per cent, up from the 9.3 per cent seen last month. As a result, the average house price now stands at £174,706, which is £16,000 higher than this time last year and equates to a rise of more than £40 per day.

Nationwide's chief economist Fionnuala Earley noted that while the Bank of England "spared homeowners a second consecutive rate rise in February", but added: "Its latest forecasts suggest that one more rise could still be on the cards."

"While the three recent rate rises now seem to be starting to take their toll on the market, not all indicators are cooling just yet," she said.

"Buyer interest and mortgage demand are waning, but the supply of properties coming onto the market remains low. This lack of supply will mean that house price inflation will remain firm for a while longer, before gradually easing."

Many homeowners find they can increase the market price of their property by making home improvements.

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Author:  Joanne McCabe

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