The mortgage lender revealed this annual increase had elevated the average house price in the UK to £265,312.
It means prices have soared by £33,000 on average in the past year and are 21% higher than they were before the pandemic struck in early 2020.
Detached properties have seen the biggest leap in prices, rising by nearly £68,000 since the outbreak of Covid.
And Wales was the strongest performing region, seeing growth of 15.3% over the year.
Robert Gardner, Nationwide’s chief economist, said: “The housing market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs.
“The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10% above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.”
Covid savings
One of the contributors to the buoyant market, Robert said, was the fact many people were able to save money during the pandemic.
“The significant savings accrued during lockdowns is also likely to have helped prospective homebuyers raise a deposit,” he explained.
“We estimate that households accrued an extra c£190bn of deposits over and above the pre-pandemic trend since early 2020, due to the impact of Covid on spending patterns.
“This is equivalent to around £6,500 per household, although it is important to note that these savings were not evenly spread, with older, wealthier households accruing more of the increase.”
Slowdown
He thinks this pace of growth, however, cannot continue and is predicting a slowdown ahead.
This forecast was echoed by Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, who said: “Unless more strident measures are taken to tackle inflation, only time will tell, whether price growth will continue in the long run.
“Households have seen their discretionary income fall by 19.5%, or £850 per year. Therefore, it is difficult to see how this will not start to impact the house buying pipeline, as buyers are forced to clamp down on their expenditure.
“For many, moving home and upsizing is often a luxury. With little room for manoeuvre, the recent Spring Statement provided little protection for households against increasing inflation.
“This was particularly the case for middle income earners, who are typically next time buyers, and consequently this section of the property market could see even greater strain in the coming months.”
