Britain's house prices just became more expensive despite Brexit

Primrose Hill housesI Wei Huang/ShutterstockTerraced houses in Primrose Hill, London

LONDON — House prices in February recovered from a January slowdown and defied economists’ predictions of sluggish growth, according to the Nationwide House Price Index.

Prices rose by 0.6% over the month, compared with 0.2% in January, pushing annual house price growth up to 4.5%.

Economists polled by Reuters had expected a rise of just 0.2%, and the news appears to be a further indication of the UK housing market’s unexpected resilience in the wake of the Brexit vote.

Nevertheless, Nationwide economist Robert Gardner said the market will slow later this year as the reality of inflation and leaving the EU begins to bite.

“The outlook is uncertain, but we, along with most other forecasters, expect the UK economy to slow through 2017 as heightened uncertainty weighs on business investment and hiring,” he said.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said in a note to clients that the pickup in Nationwide’s index “goes against the grain of recent housing market data” and appears to be the result of “volatility” rather than price growth recovery,

He said that a slowdown was likely because “households’ real incomes now are stagnating and mortgage rates have hit a floor.”

Both Gardner and Tombs and predicted a modest rise of 2% over 2017, meaning that price growth is set to stall dramatically.

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