UK house prices rose at the fastest annual pace since mid-2007 to a record high in February, survey data from the Llyods Bank subsidiary Halifax showed Monday.

The house price index rose 10.8 percent year-on-year, which was the biggest increase since June 2007, when it was 11.9 percent. House prices climbed 9.7 percent in each of the previous two months.

On a month-on-month basis, house prices rose 0.5 percent in February after a 0.2 percent climb in January. Economists had forecast 1.0 percent increase. Prices rose for an eighth successive month.

The average house price set a new record high of GBP 278,123 versus GBP 276,645 in the previous month.

Average property values have now risen by GBP 38,709 or 16 percent since February 2020, which is before the start of the Covid-19 pandemic, Halifax said.

Over the last 12 months alone house prices gained on average GBP 27,215, which is the biggest one-year cash rise recorded in over 39 years of index history.

Russell Galley, managing director, Halifax, said the lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend.

This may be a particular issue at the larger end of the property market, Halifax said.

Geopolitical events such as the Russia-Ukraine war exposes the UK to new sources of uncertainty, even as Covid seems to be moving into an endemic phase and almost all domestic restrictions are removed, he added.

"The war in Ukraine is a human tragedy, but is also likely to have effects on confidence, trade and global supply chains," Galley said.

"Surging oil and gas prices are one immediate consequence, meaning that inflation in the UK - already at a 30-year peak - will remain higher for longer."

Halifax expects high inflation to add to the squeeze on already stretched household incomes and the extent of the rises in the Bank Rate to depend on how it affects prices and companies' approaches to pay over the months to come.

"These factors are likely to weigh on buyer demand as the year progresses, with market activity likely to return to more normal levels and an easing of house price growth to be expected," Galley said.

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