Prices increased by 1.7% month-on-month.

The index has also revealed that the average house price exceeded £260,000 for the first time, signalling an increase of £29,162 over the past 12 months. This is the largest ever annual increase in cash terms since the start of the monthly index in 1991.

The price of a typical home is now £44,138 (20%) higher than in February 2020 - the month before the pandemic struck the UK.

Robert Gardner, Nationwide’s chief economist, said: “Housing market activity has remained robust in recent months, with mortgage approvals continuing to run above pre-pandemic levels at the start of the year. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.

“The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months.

“The strength is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence. Indeed, consumers’ view of the general economic outlook and prospects for their own financial circumstances over the next 12 months have plunged towards levels prevailing at the start of the pandemic.”

He continued: “The economic outlook is particularly uncertain at present. Nevertheless, it is likely that the housing market will slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise above 7% in the coming months.

“Indeed, there is scope for inflation to rise even further as events in Ukraine threaten to send global energy prices even higher. Assuming that labour market conditions remain strong, the Bank of England is also likely to raise interest rates, which will exert a further drag on the market if this feeds through to mortgage rates.”

Mr Gardner concluded: “Housing affordability has already become more stretched, in part because house price growth has been outstripping earnings growth by a wide margin since the pandemic struck. The price of a typical home is now equivalent to 6.7 times average earnings, up from 5.8 in 2019.”

Martin Beck, chief economic advisor to the economic forecaster EY ITEM Club, commented: “After January delivered an 0.8% month-on-month rise in Nationwide’s measure of house prices, growth continued in February. The rate of increase rose to 1.7%, the strongest since last August. This pushed the annual rise in prices up to 12.6%, and left the average property value at £260,230, the highest on record.

“However, the potential for continued growth in house prices faces new headwinds. The recent rise in energy prices points to inflation peaking higher, at close to 8%, and staying high for longer, than previously expected. The corresponding squeeze on household incomes will be more intense, meaning fewer people will be able to afford to borrow the necessary amount they need to buy at higher mortgage rates. And consumer confidence, already affected by cost of living concerns, is likely to be sensitive to geopolitical uncertainty.”

He added: “Granted, the spending patterns and savings of those on higher incomes, who are more likely to be in the market for buying a property, are less exposed to the rising cost of essentials than the lower-paid. And global uncertainty and the impact to consumer demand from the squeeze on real incomes may also cause the Bank of England to proceed more cautiously in raising interest rates, with a knock-on effect on mortgages.

“In particular, it is looking more uncertain whether the committee will raise Bank Rate in March, as was widely expected. The EY ITEM Club continues to think that Bank Rate will rise to no more than 1% by the end of this year. But overall, while the cost of mortgages may rise more slowly than had been expected, the outlook for the housing market is looking less buoyant.”